ITRI - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Itron, Inc., Q2 2021 Earnings Conference Call. Today's conference is being recorded.

For opening remarks, I'd like to turn the call over to Mr. Ken Gianella. Please go ahead, sir.

Ken Gianella

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

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

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

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

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

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

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

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

Tom Deitrich

and for you morning, us. Ken. you, joining Good Thank thank

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

through results These approximately due reduced Our within our increased revenue the quarter. expectations million. shortages that to by operational primarily constraints $XX quarter below were $XX million to component the

quarter COVID-XX to resurgence, is customer the anticipated, disappointing, to again. impacts we revenue XXXX. beginning during the This year outlook move demand confidence into second demand as to numerous Barring continue of expect reflected with the into recover bookings latest level from second recover in and our quarter, projects any While forward half the started was our negative backlog numbers. increased and the to

to X. Turning Slide

saw achieved approximately our we customer Outcomes billion. approximately Networked ratio segments. allowing bookings for of $X.X total a record $X.X million, backlog X.X:X and of billion backlog of and of driven quarter, approximately consecutive XX-month strong very third by activity $XXX the new Solutions We For a a book-to-bill over

but with increase we pleased are view We backlog XX-month in it the the pre-pandemic. had remains million note approximately $XXX continued the below

a our operations, bookings our performance is our New expansion with Con agreement with an to with in Singapore agreement upgrade AMI gas with quarter's England; solutions footprint Asia National Power; This communication New expansion New an in their York and of highlighted Pacific by Grid great Florida; SaaS extension and data AMI, management for in Gainesville, importantly, the of continued solution an standing complete of with York. Ed and Colorado in Xcel partnerships

customer We our base see over encouraged rebounding the quarters achieved demand are the and by few past globe. the bookings and the across

of and constraints half XXXX. component However, the anticipate to likely through persist the do into second we year

constraints the temporal operations component I like Turning that discussion and have to it's the the to near-term and brief effect Slide that quarter our on impacted having X. would a on outlook.

component saw logistics from the constraints, factory stemming consumption and includes supply pandemic. efforts until we served second through our This macroeconomic-driven disruptions, navigating constraints been supplier well. impact the challenges have as from the we of Up the buffer from us component quarter, quarters, few the our past material the components, mitigation order key raw we For supply driving products Entering shortages and to targeting on discontinuation. our alternative steel, elevated with sources customers pressures saw their key particular, and, times, our partnering components, low-value, and increase in of visibility semiconductors. needs beyond low-margin for lead on cost coverage the resins, for logistics inventory normal quarter, supply increasing minimal

These had hot specifically except all away During the for The performance. applications the analog space demand in for focus microcontrollers within commitments. components, Networked semiconductors allocations. spots were quarter on segment unexpected quarter, our the experiencing in predominantly here Solutions that and the are, limited delivery in industry-wide delays used delivery semiconductor primary and industrial components semiconductors. coupled automotive In the we revenue-related constrained fell are significant and driver for unfulfilled heavily general, and commonly matching impacted the with largely

alternatives. continuing team the of our working handful bottlenecks at the associated Our semiconductor these is leadership to teams constraints and mitigate to maximize by aggressively with executive with allocation suppliers

the also project fluid to to term. demand let that, me is our lost as near working future to and volatile remains expected are into situation be customers Itron delayed for to multiple With discuss quarter shifted This across to the align is in periods. with second schedules hand We but results. continue off Joan and not industries

Joan Hooper

on then full the update will and year. I Tom. quarter you, cover provide outlook second our the an Thank for results

expected were Tom QX constraints. primarily As lower than mentioned, component to due results our

but customer fulfill demand. we that demand As saw deliveries, to delayed begin of shortages to part anticipated, a recover were unable and in the we due the portion to second quarter,

which a the of Turning summary to Slide consolidated GAAP X, QX results. is

in meet constant the component or $XX in than to the segment. limiting XXX with Second We currency. impacted $XXX revenue due our of ability constraints basis approximately million costs. the diluted manufacturing estimate points that quarter loss the largest being quarter The customer year. net The million decline revenue million, related America. year-over-year a versus share Latin for year of prior by lower diluted inefficiencies divestiture demand. higher million offset and mix XX.X%, Solutions to negatively to million net in The COVID-XX. X% or net product decreased last was supply GAAP XXXX with in QX partially higher shortage was $XX concerning to primarily $XX in $X.XX was compare $X.XX component Networked felt due favorable of Gross loss QX was to changes per or due loss margin primarily the negative XXXX, year to This last negative $XX impact chain the share per X% by

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

Solutions to a $XX partially the year-over-year changes year. $XX impact our currency to million currency $XXX $X year-over-year and The the customer delayed increase on prior decrease meet million, million, the Slide as increase or constraints component resulted to component this professional constant in with year-over-year demand Device segment in the managed due versus increase was impact prior increase was currency And the revenue was higher higher factory year. by on projects. well revenue was compare a Looking at X% million foreign XX% the favorable revenue by lastly, ability constant business currency. impacting segment in services. The million The a a limiting X. timing Outcomes driven offset $XX was constraints million by or Networked as Solutions constant revenue XX% COVID-related $XX of XXXX. of a Revenue closures the from million, decline was or year, $XXX customer due in basis. of

to bridge on non-GAAP year-over-year Moving the EPS Slide XX.

EPS positive The improved of the prior decrease XXXX. drivers non-GAAP year-over-year. by in finally, year. in per by And by diluted count versus year-over-year. $X.XX EPS This a negative Lower $X.XX share, from partially Our per impact up of performance, interest of per $X.XX QX improvement and year-over-year operating the $X.XX currency in share was was resulted share resulted efficiencies. operating had a component Improved expense rate non-GAAP a shortages. impact a were manufacturing tax $X.XX mix versus driven QX $X.XX product performance and changes higher offset QX was share net lower in related XXXX. better which the EPS foreign A to increase increased

by as margin higher points $XX due to Slides the Gross primarily efficiencies. due reduced Operating million due increased expenses. basis revenue profit partially Networked XXX with manufacturing points partially than increased Device million segment to to operating gross margin with higher last points as expenses. higher XX% favorable I'll margin points favorable margin to reduced manufacturing of and Gross XX% gross inefficiencies to higher Turning by revenue Gross business was basis solution Operating Outcomes COVID-XX. higher results year-over-year year. offset improvement margin, well Operating gross compared the by and margin $XXX related XX year-over-year mix margin prior to increased margin COVID-XX. points XX%. to gross Solutions increased cost QX XX%. year-over-year of margin of and increased operating points XX%, basis was XX%. product XXX revenue lower million with $XXX through of investments. inefficiencies gross offset XXX XX, of operating XXX margin margin year, discuss margin and gross with basis due year-over-year XX mix due basis XX to with margin Solutions was operating was the related the

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

accelerate in an convertible quarter, As we the turn, completed discussed enabled bond which to debt our equity on a our paydown sheet. of raise our balance last call, in and, strengthen and us first offering

was some first negative senior strong in by better XXXX. cash debt Cash interest capital, at of $XXX of $XX the a flow QX, the the quarter from improvement of were completed million at flow driven of at which and with million at While didn't leverage CapEx in the $XXX year XXXX, premium, million. transaction quarter X.Xx versus primarily delevering quarter, the which, $XXX the and the Net repayment QX Free notes, Total of quarter. The down including of totaled working the debt the million the $XXX a lower call of was the million. the second was was QX ago. the X% end cash until occur and second $XX was was equivalents some is end end second X.Xx net timing. end and million gross

on our Now outlook year XX. XXXX turning Slide full to

low continues albeit of year range. demand from customer show the with end outlook guidance the in original line our expectations, at and to full recovery is for Our COVID-XX

shortages we just constraints full range $XXX constraints second through a revenue heard However, estimate provided to XXXX the in half versus component million the of you year. to approximately component QX. these billion will the million we QX the $XXX lower from billion the that million billion for We we in component in results of expect of in Tom, we as billion experienced result full continue in revenue $X.XX will the in $XX Factoring $X.XX year February. year, revised million to experienced including $XX $X.XX a $X.XX to the

the this supply recover to these allows well costs. of and recovers chain the as beyond to lower component delayed earnings impacted The higher XXXX expect of demand. will as most when be component by fall-through given this We negatively shortages us supply revenue fulfill revenue chain-related

Our shares $X versus to $X.XX of is results outstanding $XX estimate to XX.X updated of $X.XX the approximately share. per impact This of EPS of assumes year reduction in full million a per pretax million. outlook average share approximately guidance income of a $XX previous non-GAAP to this for $X.XX This million XXXX. outlook

between strong pleased summary, year a non-GAAP in interest $XX our continues the recover of demand U.S. of to half dollar to new reflect we foreign In and exchange approximately effective second growth. half rate of We for QX full full to bookings, that rate year, million. $X.X another which euro the second are see quarter begin XX%, outlook and was recovery. tax year signals expense demand to a demand future XX% and customer were QX, in assuming

near-term impact projects constraints remain reduce on will model lower to financial and headwinds, fixed negative it performance, will we as long-term outlook have navigate than However, we we due cost our underway the targets. XXXX and is guidance. our year the component and earnings The have our to resulting continue in these full confident for operational now our revenue original the

Now back I'll Tom. call turn the to

Tom Deitrich

you, component a are Thank record business outlook position the We the our overall strategic balance Joan. in With our sheet, company forward. flexibility, on near-term as and for strong increased remain through backlog the great to we constraints. we drive positive work

the We footprint to points over our advanced, delivering multipurpose, X expand strategy cumulatively, million have grown our our end network. to distributed-intelligence-capable on of multi-application

customers quarter, to During saw solutions. our once demonstrating can we the our with we growth Outcomes value our year-over-year continued second a install then expand network, Outcomes that in our we segment,

asset-light our dynamic this becoming on reducing We fixed in continue to strategy, execute nimbler our costs and environment.

the in we please so long-term just remain we have we it Operator, of made these for continue on that positive also joining to you far Thank a efforts While for execute today. why line will XXXX, the create is our as are open some the examples progress value few questions. strategy.

Operator

today our from comes Tommy Moll Stephens. [Operator Instructions] first question And with

Tommy Moll

Can you me? hear

Joan Hooper

Tom. now, can We

Tom Deitrich

we can. Yes,

Tommy Moll

of now are like ready going the feels your are your customers to well spring to Yes. of substantial the all be pop, if the there start Tom, Or address cancellation? then component-related just this I just is but right? pretty It And -- compressed wanted this contract been could at customers this, push any terms delays, last impatient you year, you does to Has pandemic-related disruptions. to the in how delays. anecdotally, point? back had end on and growing major

Tom Deitrich

by good. Very at cancellations no all. I saying start Tom contract would Tommy, here.

the in with terms aligned on are that been us the working of of have making We project customers appropriately. pleased sure with schedules response

So periods, lost unfulfilled so of customers and the not on the their the we in into that nature rolling is which that in of the possible. implement the the delayed contracts the second really demand year, relationships but customer That's quarter as the future desire those or projects where our interested back out the on technologies forward have. and their is see part in to stuff there. reliability networks, the the improving investment up were business a that automation we based about time them are Clearly, technology that that the half of for the in thinking is shore and and regard of quick point helping as are resiliency the of is customers where various doing we

of themselves. as from We -- So our quickly we're possible level supply fulfill and of standpoint. based on those aligned as as on much very want components to appropriate impatience agreements very that the the

customer I remain pushed relationships indeed characterize would demand periods. out good strong. it, how that's is So and into future The they

Tommy Moll

delays appetite? the a And the be? follow-up, component these And to Tom, and as your on us there refresh from pipeline what characterize priorities any impact could might you M&A

Tom Deitrich

financial inorganically. The no nor long-term our the no pushed model our to environment has change the change little to current Clearly, our strategy financial we've demand a doesn't pandemic our Sure. nature business sort it bit, first pandemic and desire and that about. out talked supply but in our of all the of related continue itself, grow model, in change to organically now

in is resiliency, at On really market the organic you most front, space say inorganic will the energy likely our space that's space the incorporate into continue to in interest remains better where so more applications make that actively. safety and cybersecurity, that reliability, us the We solutions see and to renewables there. where look is certainly I would going, high automation, target ability would out Outcomes water move. an

Operator

and And Company. will Osborne come question Jeff from our Cowen with next

Jeff Osborne

the I own maybe finding you've to your longer third mitigated relative my issues. parties. tougher these on maybe couple having if manufacturing you contract using I'm curious Carolina Are term. less direct having you're of contract that time footprint end. changes have a some South component was know an this procuring I but if of just issue? a in your manufacturing had I got is also your like auto, manufacturing but both side would wondering facilities on

Tom Deitrich

as power around in strategy Certainly, maximize we well is largely things that whatsoever. on as are the partnership across electronics itself. with to relationships supply. direct is are semiconductor we largely it microcontrollers The in board very components are components of all our constrained itself, No the associated change that the analog they in and work and do suppliers the contract play our their leveraging manufacturing where constrained spend the with chain the -- that are space, area in clearly an used that like that components And manufacturers. are the today specifically sit commonly

So shortage. doesn't the this that our the to with regard, I from conditions contract forward. the us but rolls fulfilling relationships on macroeconomic in led Based insulate we certainly helping manufacturing environment definitely though, not this are our business that us demand that in is it believe quarter

a issue lost. it us. So It's isn't for timing

Jeff Osborne

Got it.

couple the Asia, in a Malaysia, back Just other in that coming particular Is are situation second region? COVID half? making not Southeast ones. you in quick of worse in the Or to exposed as

Tom Deitrich

a From thinking about or a demand perspective side -- from it revenue

Jeff Osborne

Or supply.

Tom Deitrich

Certainly, issue I an it revenue. something not going, It's was issue. an consider where is to on of supply not That's on Yes. side the things. so

of There the environment. of of part directly of not look that where manufacturing materials chain. that through are components the But today We do a raw a ecosystem. in I broader spots from come that hot lot raw feed are and terms exposed the are world out the

are often to and of an closely. will that part example, are to they So is as semiconductor suppliers watched suppliers, that in need that something be the that world,

All the that we have of considered guidance absolutely provided. that is in

Jeff Osborne

other Got quick it. Two ones.

in pipeline some second just the like is, outstanding buyback capability a then had RFP the quoting any another nice And place? one for plan quarter. Can on half? what just looks quick you does wins Board have in the the You articulate activity and

Tom Deitrich

technology and first, interest strong the our of continue on see take the Joan the I'll definitely to part address second. we for customers very provide. We types can of the So

the So grid important, resiliency automation very in water in is vertical. reliability the and gas space everyone's is Safety is high and security on and mind. important

verticals that things stand. were optimistic strong the serve, in strong. -- second each we in pipeline the where remains and Bookings quarter very quarter So of very one about every the we're and

heading. are We have of another in terms backlog record where we total

to our wins functions highlighted those technologies, bright really need basic around and excited terms is it. The of that customers. for we and we're revolve in provide future the So the

Joan Hooper

Board is current for -- And any buyback. no question the on on stock authorization there

Operator

hear with from we'll Paul And JPMorgan. next Coster

Mark Strouse

This is Mark Strouse.

a potentially a aware, direct follow shifts but -- semiconductor risk of extent if using to activity you're question, strong, different suppliers? competitors, your Jeff's curious some just of components, like I'm It To deeper just near-term Just your pretty there's are remains up booking do the here. you think share kind bit using on the little sounds market same digging that there. they

Tom Deitrich

of really insight and the industrial in in industry I of in components used got that In very would terms the any commonly that is say I the are automotive supply significant of applications. I've that supplier terms are don't know kind base, that across base. constrained today general,

SaaS consolidation would agreement, with in that industry, I and we are it we're project all a I certainly So suspect, a important then the suppliers a we agreement that couple don't share board. number same terms in given the a a to sets of board. remain semiconductor the strong We share the agreements in, usually service of the in have are we pleased play years we long-term don't particular contract detect with for customer of and us move. the to implement front. verticals the when movement And long-term any in long-term engagements terms The with work to follows the we discussions see takes any across of and particular of that very after. the have. I across customers in on

Mark Strouse

are just the be you the you in looking mean follow-up. mitigation a on Can then specifically? term? color near suppliers? supply locking to agreements? a bit the And more semiconductors quick longer-term efforts give talk within can done to you add Or just about additional some there Are what Tom. I of -- Okay,

Tom Deitrich

we'll have are so last so. on parts, that's of and are day, Working again, indeed work of forecasts that firm agreements -- of suppliers we set they themselves standard another. it. a given over number we closely and something suppliers one the been horizon or efforts do years. orders they supplier. exploring to state think benefit. of provide working their than common couple the on out that work with have are to I demand wider the the every Whether alive there specification had have the suppliers the a say with alternatives. is part particular And would current We been any continue that changes a of to customers multi-sourcing certainly But undertaken and to and over we longer-term is outlook the purchase align those things so better information longer a well with to shortages it's another I supplier macroeconomics, mentioned you types can on Long-term of time

to work. run, are part really the those components are and efforts short maintaining really, current supply continuity the In most allocations of continue tight. as All is that important the we the of will

Operator

from our And question with R.W. Kallo Ben next today comes Baird.

Ben Kallo

there it about shortage could autos as just -- the I to about wasn't Maybe were we talk as like you that auto much Just industry? there the talking because cadence last of relate it. the think shortage was when year,

And question. so am there I Or not a lag? correctly? first That's just remembering was my

Europe -- exposure costs. the visibility into The Tom, where I there kind of both? -- headwinds. competitive business. for to said your the about differences the more then of you just question the the you and What -- so saw stretch differences talked levers is but you on environment kind can on second just the factory And third because or just pull Is can it see of And some XXXX. thank you on that, you maybe just or the you was question footprint

And what you are doing on cost front? the so

Tom Deitrich

Very good.

number there. a So things of

if see me I cover them can't Let all.

start inventory. to some orders to stretch out XXXX. year with reacted in, we good So actually to on came the appropriately the say, that see buffer placed the started side and times lead I'll shortage into late things, of We and

the when really the present to fair publicized in shortages and it European shortage nature comes the that our of their are QX, of the given in buffer to The footprint. things discussed amount a been position sadly, During in side the of On well different market, quarter hit industries. ended that been on it of up a terms and regional consumed starting materialize obviously second, most Auto is second a side the differences, clearly manufacturing recovery half the is And up of the behind in demand America nicely discussion the today. of year-over-year. of first it and North of while post-pandemic, bit has on we the we press. in and number got pace that inventory. we broader with It's

You could business devices quarter use XX-plus the we pretty this proxy, second year. a as where second year last from percent good quarter to up were

So on XXXX, guidance into is our side, the coming unfulfilled back demand means of QX the networking demand baked bit the have America. total backlog. little European has nicely Networked in really North networking about a in to we and very business behind bit very, the strong business. compared our albeit Where side shortfall the pace and recovery of plus on revenue what to happened and relates a Outcomes is The X/X electronics really backlog. more the which the

projects. work to just So to demand customers our be we able over fulfill business implement of We the and feel that the trajectory time. good about got with to the

of On the board is mitigating will best cost the us. clearly, we side on medicine the sure component on work Getting revenue supply. for the aggressively things, back that for continue to

So expenses. in we'll be operating of to terms careful continue

that to they continue to as make are our the can will factories given operating work constraints revenue efficiently sure themselves. We as

overall there. plans part types work announced the on will asset-light continue with be of That portfolio. in the projects the our of restructuring things XXXX back no for we in longer-term All and at change that of ongoing pace

to final -- us the a we lower been we working overall. situation continue this use end-of-life have that now as margin -- out to quite make portfolio current for products changes are phase certain time for are as on point, some also, We that

of snapshot plan we quick the lengthy a from be or and would how game perhaps snapshot that So go overall here. a

So points, your I all Ben. hit hope I've

Ben Kallo

you No -- got Thank them Tom. you, all.

Tom Deitrich

good. Very Thank you.

Operator

Pearce with hear Piper And next we'll Sandler. from Hammond

Pearce Hammond

in that. shipping, Just the to you want to specialty are those and the the just resins semiconductors? I the it's but were more from that on saying getting clarify better here, remarks, steel and really the clarify, prepared like

Tom Deitrich

semiconductors context, exact just is to side, The only on it meaning again, down delay. is Correct. shipments, as repeat where revenue material gating the to the it our it

that gating spots other year, revenue us longer on earlier areas the the On in the are seen hot no we've side. they

We a us continue nothing monitor to sure That that, pressures again, high we today. work concern up that board. see for cost that's not do make but pops across to said, the

is the board, cost well that's environment something means our definitely pressure hard an the it as across meaning logistics that line. doesn't and and from we resin productivity to as semiconductors, sure mitigate remaining under steel So make impact overall bottom and to through work

Pearce Hammond

And also into had year the you would said then press and in the second of the impact half release, then impact it 'XX.

curious. So or first 'XX? I'm just you more of it or first bleed into kind that? How longer Is far do expect to this quarter than half

Tom Deitrich

have guidance back that to run not the little couple but at specific to on fine difficult these put to tend XXXX to Yes. happen into of Very a as be for We no Generally, want the forthcoming we've well look visibility as the balance equipment -- when done start may things until a on this come side, on point a time. by again. end it. things placed great they of given to like. my experience quarters the semiconductor year, what We as it don't it would that be side

Pearce Hammond

And bill, see gets bill Itron do one me. passed. then infrastructure last from how that curious I'm just if a beneficiary Biden being The you

Tom Deitrich

of that right on its a you series the looks bipartisan D.C. to that's It's package in working through long The amendments be making way -- now. through. As know, process out there continues

of -- approximate there vehicle grid hundred grid, across space, types products reads grants, smart the particular the services to the in a the that a those are I'll approximately look there inside EV-related call provisions. -- programs of electric types for sorry, of similar that dollars trillion in billion, is spread we X.X hundred types kind frame, very of there -- directly you various of of couple them, back for spread those dollar happened of do. which is for matching on are package, and If provisions In funding million couple time 'XX electricity in preparedness. dollars There which and 'XX, across energy, water

Operator

question Kaye next from comes our And Oppenheimer. with Noah

Noah Kaye

think current. I revisions, a to past, the guidance the prior bridge In from we've the when seen sometimes some we've gotten

do networks just ask parts of possible the You I be business, assumptions to I if so us but a wonder the relatively couple a it a for have moving like be high-margin guidance bridge here. margin-dilutive. lower you've Clearly, help understand, us on given understand will to would something in slide,

or have offset You to some potentially mitigate. levers other

within guidance. you revised how So think just understand us help parts maybe some moving the of here of the

Joan Hooper

Yes.

take that. Let me

if you if at look the the to take math the me new So guidance to make it think -- guidance, let midpoint just I simple. about at just the prior the

the midpoint down. is guidance the of revenue So $XXX million about

discussed, we so constraints, million, component range that million $XXX million $XXX $XXX all really of million -- to roughly supply As chain in $XXX between. related it's

in comments I income The were in other of $XX million be would made a to the million. range script down $XX pretax that

$XX of at kind midpoint. that million the call So

is our So the impact really segment. and is quite high, One Networked X the flow-through margin component company, for than to reasons. income average Solutions in primarily the our is in gross higher that's much

right some margins high-margin And company now. And so that, by is than overall getting business definition, it that is has pushed higher out our gross level.

cetera. Two as Tom that's one. is So is, there kind pressure mentioned, et freight, on cost components, number of

a is factory overhead that then revised our absorption there's And as So guidance issues. factored is in well. issue third

we to a but expect fall-through heavy this with So again, quite recover to future, revenue the shortfall, flow-through shortfall. it in all And those of right now. is higher from end the earnings up

in that of EPS the think the we provided is majority fall-through really, margin-related So fall-through. the that

call pre-COVID-XX when was what we So at margins it, we it looked for XX%. get level, to to the the gross expecting if you basically are back year out, at started

of All probably costs a or so. us point this

So best as to OpEx resumed we is. continue to can. that that's company. Obviously, really kind control across really haven't try travel that what of we things We and like the

is lowering So shortage. be most the in to OpEx of the EPS in place, spending related general, controls continue margin but component of to this

Noah Kaye

in comparison trucks design there's I fair chipsets flexibility question future. us guess older very using but you reduced in functionalities with and design is a typically a in we've Because business auto, and volatility. mitigate in understand greater meet And terms ability greater is design flexibility to to the not future? off-the-shelf possibility like just help just and kind reduce it using this constraining I helpful. feels for can ability company to kind Joan, that's guess a as make be products? the to of this future maybe I not to you're It's flexibility the specific exactly in seen certainly why in the of around cars the to help there still what think would customer able of shipped the ability but maybe, in and industries much product components, this really components like demand.

Tom Deitrich

and match to generation general and does design generations are with that products in terms and over multiple tends that in generations better us we That give that product we -- were a types of your itself, start. thought a and more The a and methodology it, lot products not we and older process latest struggling to to ability the I'll are the ability with mix products of with -- with the that we've current a with reduced, working be perspective platform premise of components have mind. and Agree call events. of lot that issue these kind the modify given -- of from the in control do of weather cycle designed agility life the from

our from only demand that of it the working long-term perspective. a actively large forward. into several will the we've that into operate which The that So Again, a means deployments been agreement, area continue model flip is in whereas of products, into back being than multiple-year the is years side those forward the journey canceled years the of is of previous so whereas be the do rolls we that rather do now, on where customer it we benefits which flexibility lack pays which and on future. based we driving get it and -- some an and results. of why a number for journey, different We're able to generations is a long-term products volatility going the or lost, we're revenue contracts have, in to is one to a our and R&D with is few bulk

couple the have we which sense, of years. why for working last future a it of in best the is on So both, been we've

Noah Kaye

and helpful. these be just very Is second- to possible so I unrealistic the to just that your I that functioning do? make of can and "We it guess with better a or expect Tom, provide financially to to lot modern, functionality?" customers follow-up -- is go would easier just, some a the regulatory system, legacy isn't Why versus and that can approval you we this like given imprudent product mean, just maybe not third-generation even this deployments upgrade need specific make more products can more possible very specs.

Tom Deitrich

possible say, would I certain cases. in It's,

If continue at products. -- generations generation that the mix how to we with on you increase between are the the of we and work customers can some look latest of of platform,

to that That's period capability. does have amortized long targeting So of absolutely though, -- points continue want over the have very of the you same the have need long the network deploy a be to area GenX And The over go something, we network benefit if very, customers increased deploy can be time. set an the able they on of the it they in to period space GenX that that's at functionality, absolutely same take an get all to time, and you a have live time. notion pursue. to model running that have GenX end utility the level at when same assets a allows in to we customer It and I the would as and X GenX, time. the of example, as of

the you beneficial the business how get and terms and latest managing comes and need, which So model of of standpoint in flows you is as generations design products, business go product where to is customer you the add that's a which it to you from ebbs a very from when as pay start, ability environment. that the macroeconomic

exactly direction the that's and agree are heading. that we So

Noah Kaye

does like aren't. Well, of I you're the risk it disproportionate level And your chain and that. supply around seem a bearing customers appreciate

to will so And see that continue evolve. we hopefully, can

Operator

question Price our with come Graham And from James. will next Raymond

Graham Price

timing. expect is more across shortage component the spread pretty was expect you be that it X something wondering, Just should Or we evenly do on I weighted impact half? to other? quickly towards the the where to be second quarter or

Joan Hooper

know specific Yes. that we've got timing. I don't

As to mean a is say on The this color I the QX. at worst the we be versus really Tom really point, But QX it's to in us. situation behind mentioned, pretty fluid. hopefully, talking we'll is call think quarter QX predict. hard don't any have I for

Graham Price

revenue of but bit Outcomes. if And Got Okay. wondering how Networked then you a between I bit about you devices, little it. secondly, kind down maybe it could the by segment, already, was on you've talk Solutions touched impact a broken and see

primarily As it's want said, Solutions, like little it a looks there. but color just you Networked I

Joan Hooper

Yes. The vast Networked electronics. would Solutions, given expect is just more technology, higher-end which majority of the you use

vast Outcomes networked. than the in tends And growth amount other devices, is that's Outcomes follow fair So -- networked. majority there to little a is then very

well Outcomes, growth you right. that So would see with kind will catch to demand the deployments to our normally have shifts up but same the delayed, we the as extent of that won't as that are the expected

though. So no impact Outcomes on material

Operator

And we'll next Thomas go to with [Operator Instructions] Stanley. Morgan Johnson

Thomas Johnson

of start Just they've of forward longer another to quarter of of in to some start times the kind orders. with lead seen I on off your front. some hopes of customers components. competitors, order the Clearly, wanted kind strong for of for orders pull kind offsetting know

was are some you wondering on deceleration on seeing side. here. basis a So just what the guys I customer There's year-over-year

order second the for of outlook the any trends. year just half and So

Tom Deitrich

that's that remains and total billion of approximate dollars strong The strong. backlog activities, backlog. very, We of in what itself X.X very a customer see pipeline is reflected

it, remarks, we solve demand, in front, to new problems desire in as commented demand to technology our see that put their order basic as business. on really customers to a continuing have call pressure prepared the the putting are definitely Joan On the practice improve

expect opportunities that and So increase, to that continue I to the very remains very, strong. continue beyond demand pipeline will of

Thomas Johnson

And question just Great. to then the one backlog. related

the clearly Solutions. It's the of bulk margin-accretive. being out side the of that's revenue electronic obviously, Networked in so things, pushed So component is

these profile thinking and worth the it's right that guess possibly margin of talk XXXX? pushed evolving your I that price us due some about the Can to backlog front of projects issue. just to maybe on about how of ability kind through you to pass you So headwind further to getting any component into the see

Tom Deitrich

a tactical book-and-ship our and really is price has The is best to types a more the way ability business we area bit turns-based -- that X an to manage is business, it that or have competitive But price need which think business that about there Clearly, the in basis. and pass we an out business, environment marketplace. to on in there, a competitive work cost sense. turns-based ongoing through more with be on ability there's there's that to a

have of level. at with things, the proper On that their it, so return in is work largely which make the sure we they side longer-term contract can piece case customers of business pricing that is customer to is on rate regulatory with in the of the commissions agreed backlog the that present

is driving is that their what That is backlog our very, the primarily very side overall and our and to we're to limited. keenly on that where said, area is Outcomes-based So business the that corporate pricing is in and which growing, flexibility in networked accretive gross is interested business, margin.

Operator

question-and-answer I'd remarks. to Mr. conference closing additional Tom our turn back the And for like to any this concludes session. Deitrich or

Tom Deitrich

joining operator. you, today. Thank appreciate everyone We

is conditions conjunction hosted As live. Day. that October, be XXXX virtually a Inspire, event holding permit, which our we'll Investor reminder, be if hopefully in is industry held with will both and, our in Itron also That large

joining. Thank seeing for everyone look So please your mark and there. calendars, you to we forward

Operator

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

audio You today's can replay concludes conference. this or And passcode by XXXXXXX, with X-XXX-XXX-XXXX a access www.itron.com. of go company's website, dialing the X-XXX-XXX-XXXX to or the

You may now disconnect.

Itron (ITRI) 7 Aug 212021 Q2 Earnings call transcript