ITRI - Earnings call transcript Q4 2021

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Operator

Good day, everyone, and welcome to the Itron, Inc. Q4 2021 Earnings Conference Call. 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

operator. you, Thank welcome call. and fourth 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,

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

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

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

Actual We with are that risks expectations assumptions this that will 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 be are based in comments and and call, Exchange conference these expectations section that and results call in reports filings other of subject and because differ materially statements our Factors factors statements and and release Form and were the the

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

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

Tom Deitrich

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

quarter. record Bookings X. is quarter heights, Due bookings over a billion, $X.X are be and domain strength backlog in to new position bookings. fourth which expertise, Market year globe. XXXX record. resulting Itron of billion in leadership the QX $X.X solutions around our demand our and Turning the utilities with This with for to record accelerating in the pushed cities were slide our portfolio for we and largest has reached on to

performance bookings to and well-above of to quarter was year fourth $X.X for $X our This of record total fourth billion. the exiting Our over full a a target our year drove Record previous book-to-bill ratio. X.X ratio quarter XXXX. X:X led of equates This X.X to backlog billion. bookings full

book-to-bill full are QX we year like Network our again of customer And that majority into our continue a XX-month least of Solutions Additionally, at quarter. used will of this our ratio bookings we strength anticipate our would some Outcomes wins segments, gauge a of one-to-one. pleased were the on strong demand the near-term rich pipeline of metric is Based billion. $X.X visible to approximately we and opportunities, see demand. vast examples quickly highlight to environment to the I backlog to Noting key targeting the support increased This XXXX.

of first technology innovation combine customers. our The an example to benefit is business ability our and model to

solution, Itron secure ownership San and SaaS-based San existing for and is data will management Water our data leverage technology new while axiom. cost System manage pleased network build Energy. times ensuring AMI Itron multiple deploy also Antonio proving CPS We that both are it lowering will solution, in of their and announce to the to total water Antonio the safe it SAWS use the once

one territories. CenterPoint deploy of the industry, in in gas service our across Energy Company, like commitment would Itron's I gas will solution Service Intelis the to their highlight market. Next, leaders safety the to solutions utility

monitoring gas the network, and meter offers our for Our Intelis capabilities, assets, intelligence the two-way of event. potential will so push can but solution alarms meter both not Itron building self-monitoring only gas smart to the thus local with incidents. sent shut their Intelis alerting can the the communications off enables edge high-flow network, without CenterPoint be utility event and a in intervention the of concerns, of safety itself utility via or authorities Simultaneously, the risk gas high-temperature of minimizing

standards-based the as a Service Malaysia in Sarawak Finally, the Network solution, advanced our and a including XXX,XXX utility UIQ Optimizer maintenance XX-year These Energy The Operations service, Outcomes customer our are business efficiency backlog operations. solution the insights open daily includes a operational are just how NAS for for and Sarawak of Energy examples few Software-as-a-Service deployment as Itron's metering deploy valuable enables endpoints as Sarawak Itron's solutions of signed well by with communication to network. Itron driving offerings. monitoring and network of a Energy agreement our performance. and bookings infrastructure safety to improve providing

next over management. metrics million they will X.X capable customer Itron's the executed add deployed Both intelligence to our these XX distributed and cumulatively important of our leading indicators that growth. endpoints are years, outcomes under As are few are million projects endpoints our

will Slide to some operational insights I to now the and XXXX. provide Turning prior X. quarter

pressures component is demand customer demand offset While than constraints. more Itron the semiconductor supply continued by record chain in for QX. solutions constraints levels, was inflationary at and Strong

our supply the XXXX, million. revenue For constraints gated full $XXX approximately by component year

first revenue XXXX. the will Additionally, our in of experienced be similar impacted at we by second half levels semiconductor constraints anticipate half XXXX of through the

to We macro continue through manage constraints. these

nature this backlog. particularly regard. in for us areas, cancellation grateful on in well project The our solutions seen serves the and customers long-term of profiles collaboration we Network and that Outcomes business, the are We our emphasize any and not of support of have

to efforts around our price actions. cost next Turning

our into last to year inflation working the protect from actively that saw resulting stemmed and are is from cost We margins that continuing XXXX. and we pressures pandemic

lower adapt moving pricing adjust to and We the customers supply costs, are realities. market aggressively secure with new to to

with our will continued combined factory anticipate component efforts utilization, to more model, a increased to our As margins. constraints improve move we asset-light ease,

the exited of including million the of our announced have recent annualized anticipate fall. of most we an businesses revenue completion annualized Since from were mechanical $XXX non-communicating this divested we $XXX non-strategic approximately last transaction. over assets, non-core, sale XXXX, in that million revenue of today, Finally, gas or

Dresser the decade towards and Solutions and this better in advanced XXXX. While allowed data-driven was solutions our journey segments, outcome it has another beyond. to us milestone to concentrated Solutions our in for bookings led innovative our this record revenue and network endpoints our and close to The on has offerings focus Devices our segment, of with next Utility develop distributed more networks, intelligent customers outcomes efforts highly product transaction is for which our serve

Now I to off results XXXX turn as quarter to X, to Slide and our please Joan fourth hand cover outlook. our

Joan Hooper

Thank you, Tom.

decreased ability or last the in revenue supply last million costs $XX to chain per meet year. primarily million quarter C&I share consolidated by approximately in or net higher million and income due constant to inefficiencies, limited we than lower GAAP and points Tom loss customer period $XXX in with GAAP gross mechanical supply similar of quarter decline through constraints. As the The Fourth fourth for has and which current X% in of demand, primarily quarter impacted from be of the $X.XX year X% reducing a due our share of year-over-year continued discussed, results. environment related $XX supply summary Gross to a driven our lower the The compares expect quarter. restructuring or X business. constraints, currency. prior net constraints Slide by to higher gas in loss first the per the profit, The margin the diluted expenses sale revenue $X.XX of year, was by the loss was manufacturing basis a net XXX to XX%, due XXXX. was expected half of to $XX component million

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

a attributable increase Looking million, tough increase of Slide quarter in to catch-up is shortages, delays caused Europe. business Solutions was decrease million Device year-over-year component Also, revenue XXXX million, shortages. part to Network $XXX decline by shipments X% million, revenue resulted $XX on a due on currency was component the in a or fourth million X% decrease a The year-over-year The a it from compare currency was due a in from professional COVID $XX $XXX was customer shutdowns XX% was constant by the which million of higher the demand. and unfulfilled Solutions earlier $XX The or constant as services. XXXX. to or decline in currency. constant segment was at basis. Revenue in reflected revenue software X. segment in year-over-year Outcomes $X

versus the revenue $X Lastly, foreign changes year. resulted currency million lower in prior

Moving to bridge on our XX. year-over-year non-GAAP slide EPS

a $X.XX per A to very tax performance, from gross diluted Our unusually impact to due component a The prior positive foreign low to constraints finally, $X.XX impact per transfers profit, $X.XX was the a compensation. EPS, was of EPS of had QX share the cost up inflation non-GAAP non-GAAP in EPS the per business of $X.XX $X.XX versus as negative activities XXXX. was operating as tax resulted in decrease year. share which in variable per by adding year-over-year $X the well had benefit, negative on in XXXX benefit tax primarily a a higher offset currency share, share Lower assets. rate benefit And mostly quarter expense This and resulted and certain and tax interest increase share. to due in by was net count of year-over-year. the impact QX driven The provision year-over-year. changes

Network basis $XX with the year, profit. fall-through XXX stronger-than-average inflationary prior year. primarily of Gross compared gross margin XX, of of Turning inflationary manufacturing to operating Operating the well by in that the the inefficiencies slides of essentially to which X% software the as gross revenue lower XX%, was decreased Gross margin QX results the lower basis $XXX segment component QX margin to X%. gross in gross inefficiencies prior points XXX to Operating constraints million, OpEx. component XXX of license and QX the to decreased Outcomes due basis as margin due the $XXX prior fall-through flat was discuss million, Solutions segment was due decreased points through revenue basis I shortages and cost with margin margin manufacturing margin and 'XX, related both of the year. with with note pressures. higher profit would and points with to to million, pressures. Outcomes Solutions of recognition of to Device revenue due of of XX%. I'll was 'XX due XX gross margin XX% margin business XXX from sales. related points decreased cost gross achieved

margin lower outcomes points XX%, R&D in investment Lastly, was XXX to operating XXXX. basis higher due

compared to was million interest improvement million. $X.XX flow half primarily compensation in by slide was XXXX. results compared approximately the significantly from $XX impact impacted the The recap constraints, which XX.X%, by flow million $XXX billion The down driven earnings full approximately in share was the results XXXX reduced $XXX Free the cash strong were basis in year-over-year variable payments of million XXXX XXXX was X% of $X.XX year briefly than compared year. year. back higher and our year. in $X Revenue XXX revenue margin Now, per Non-GAAP prior reduction prior year on lower largely the in full XX, constraints, particularly points to supply with attributable was XXXX. the by million to cash in of $XXX XXXX. was Gross supply the EBITDA was Adjusted with XXXX. $XXX

liquidity to mechanical C&I end at million, X.Xx debt. cover net fourth assets QX. for $X was million flow was gas cash Total at of related debt Net to Turning $XX was I'll the of debt Cash to the quarter reclassified and our which at million sale. of $XXX flat was remained slide business, sale including million. were end the and quarter. the million leverage pending held fourth Free equivalents in XX. and $XXX the $XXX

on announced authorized Board up Directors last we a repurchase million $XXX share call, an XX-month of As period. to of over our earnings the program

the anticipate under $X.X $XX.XX. As we to average XXXX revenue some I'd color shares be with price our turn repurchase of $X.X of million a provide of have We Slide XXX,XXX an expectations. year to range XXXX like XX. on today, repurchased $XX in full to approximately or Please to billion program billion.

first in revenue by expect the the of shortages, will our chain of XXXX. XXXX half experience to be back the half We constrained supply in similar

the of will constraints begin the second allowing up year, on the the supply first in shortfall. portion is the to half expectation current improve At a us Our half catch to of is both Network is Solutions. by Solutions in annual midpoint, decline year-over-year segments, approximately and in by X% partially revenue Device growth guidance driven a Outcomes the growth. offset XXXX This our

make We guidance decisions by has mechanical lower gas C&I Devices also approximately segment, portfolio sale which the continue led reflects million our which business, to annualized $XXX revenue. to on our an revenue reduced in of basis. This

the growth performance. per year-over-year share. for rate over normalize XXXX midpoint is rate guidance guidance revenue be sale, range $X.XX If the would non-GAAP of the you the for of anticipate diluted of of both to at and tax normalizing earnings rate We the to approximately than $X.XX XX% the the within XXXX impact our XX% EPS the At to be a midpoint X%. years, full year growth higher

our of we the headwinds of million challenging of skewed the rate rate the obviously approximately first expect the the second non-GAAP assumptions chain worked We guidance year to the an supply faced. XX%; XX.X Other of outstanding impact, were will XXXX. earnings we Given to was to for X.XX; year but constraints exchange full In it diligently the in given US foreign Euro year, be average shares. of summary, high heavily supply disappointing of average a tax are: mitigate a the approximately us. half macro continued currency half shares level to effective results

half we the see the the improve year. 'XX, constraints supply second we the of will first the continuing of through anticipate in While situation half

a will the backlog recovery supply and when facilitate strong bookings rebalances. record chain Our

turn I'll the back call to Now Tom.

Tom Deitrich

that technology XXXX outlook, with our semiconductor pleased you, have Joan. impact are we demand and and Despite on constraints the pipeline Thank had our extremely the for solutions. opportunity

in vehicles, management Solution opening with month, to invest this management Itron's and distributed to globally, EV electric organically be is overcome like would combining Earlier end-to-end portfolio, allowing as Itron use resource item EV the facing for to platform to elements, and prior service launched chargers, set. low-voltage charging that solar agnostic, One to such storage Available final distribution utilities formally and enable EV management local assets transformers, optimize these optimization. into our charging to visible grid continued first-of-its-kind Optimizer challenges these grid inverters, our the including a network endpoint We combines our disparate energy industry. under part With solution of an and costs pane loading, real-time solutions customers portfolio, insights as Optimizer I grid single service highlight intelligence. Itron's Q&A. for glass improve Optimizer reliability solution. distribution assets This energy can distributed balance management, and of a Optimizer edge dynamic

integrated kind solutions present management load control assets For has optimization. example, allowing fleet platform, EV first charging work solution Itron solution, in enables to grid. the management a this with single other of its cohesively management grid and EV A and charging into

in the of multiple the network. distribution and a fleets EV open barrier on significant industrial Our utilities And solution and vehicle low-voltage development commercial charger agnostic. is alleviates and it standards-based deployment

result in Our enable in pride questions. of of globe for in invest We We business. in the insight as the the the of to supply well confident in belief demand Operator, open for our today, are face points an environment cities to to and take covered around serving today. Thank of long-term providing ground please joining line model. our and lot utilities you into continued needs technology optimize portfolio in our as the Optimizer some commitment manage for grid a proof the our increase effectively the exponential is services customers complexity. current and Outcomes and

Operator

from take Oppenheimer. a with question you. Yes, Kaye Noah And Instructions] [Operator we'll now thank

Noah Kaye

we questions. for start there. impressive Good bookings, morning. if I taking the Pretty Thanks wonder could

you would books are of sense, give your networks. Any seeing from how mostly in qualitative transition that some you world? provide much is of as Just well a kind us as the And How be manifesting can side OpEx helpful are a that about metrics you well? utility of mentioned are color. Outcomes as that the bookings in the pattern? [ph] that related to transition CapEx that changes regulatory to on on How supporting

Tom Deitrich

Sure. is the of towards tilted in This one, Networks we Tom. take the I heavily really we was the full that trend fourth that continuation that bookings a saw year for saw quarter can Noah. and Outcomes. and The

as And seeing So that The of of generally that flows itself. applications. network XX% are advanced in very with is essence. network component solution that the is top revenue one nearly was the it. has through service-based really every an recurring bookings NAS, component Outcomes Outcomes a that networking bookings, more and That along we're that rides position SaaS a of in goes technology a backlog. into or longer-term a That the the bookings of type its on the four

than have intelligence-based already solution. city endpoint two more we good And growth contributes streetlight bookings. the smart deploying We which applications, automation to and are see dozen in distribution, that in customers our distributed

Noah Kaye

Thanks. helpful. Very Okay.

operations can visibility talk base? you expecting provide you at and if and the in facility about bump you're of can utilization kind about back about update about the back year? bit provide little supply initiatives bit improve. more could of thinking fortifying color it us where utilization little I'm you the on into near-shoring help half the chain. a up. your I talking kind A to that so of kind where is your to of going But Any supply guess, half progress the on strategically you more I'm there. not And wonder talking Joan, of year, Just I mean, -- you're mentioned of I to course,

Tom Deitrich

do Sure. Happy so. to

we to the second during the begin As half rebalance prepared we year. of expect do supply remarks, the chain to talked about in our

happen up. get but to ago Important with filling it. that factories do and flow along our of in you also fall note then will utilization about to through, that So, see benefit of moment those And bookings begins a as the spoke all through. we revenue is obviously just the results that what the you goes the that

very healthy we've demand need we that got strong and a along So, it. go environment. What components with really the is

continued by they American positioned the optimizing utilizing of factory that markets comes are -- itself. side hard globe. well large, of rather say, that of factories our the out is the now to Most have market, supply or example, I'll work for from, this the close So, the to and We serve., footprint on North served

So, has undertook over that chain the notion across years the last of nearshoring supply we board. five our been four, strategy the

terms the forms. of In is it margin I three comes One improvement, think fall-through. revenue in

you components, and the that start get grow, to you As topline through. see flows

You see utilization the working improvements those cost And then, course, on manufacturing factory of the been is that of terms of the third the in footprint. we've assets.

guidance All accrues which based the of commentary that and back of our is half was the into what on. year,

Noah Kaye

so much. Thanks Grateful.

Operator

We'll with now Jeff take Osborne Company. Cowen from our and next question

Jeff Osborne

Yes, A on good couple morning. my end.

what semiconductor I'm QX. say if year, impact, On the $XXX of Joan, QX? the in I remind trying for I was you was get half heard first just that million million for for us $XXX of XXXX. a sense you the wondering impact could to

Joan Hooper

QX. was Yes, about $XXX million it in

Jeff Osborne

Okay.

the and is to acquisition? impact about the then on $XXX for million So, just million I'm an gap there. bridge trying guidance semis the from $XXX

Joan Hooper

on million divestiture. annualized $XXX is the an number

Jeff Osborne

And Got then… Okay. it.

Joan Hooper

through of impact, kind kind would half for of you're months' of business that -- looking sorry, February, looking kind owned first if we so for four So, worth. you're if first have

Jeff Osborne

it. Got

San a you Okay. of there that think are CenterPoint billion name were and question the you percentages the Noah's any applications some prepared that that remarks, that those that. And chunky -- wouldn't two you us of? large mentioned customer networking in that in didn't $X.X could electric flavor then Because you on bookings, I the the there. Was to and DA Antonio, for orders give flagged electric

could detail that? So, you

Tom Deitrich

territory-wide larger smart deployment solution Sure. bookings that It The fourth for the offer. gas that we CenterPoint booking quarter gas the is clearly that was of number. in a one was

But There Power type say largest. to numerous space; of of inside business of it are Texas-New bookings lot of would existing TNMP, is So starting see add-on one what in Mexico is with electricity you're are I a was bookings probably there the see -- of the the other one larger. customers. in the themselves that is

exactly it's it and So coming which is also what playing in smaller perhaps strategy But to as in our revenue that case, particular comes out added recurring long-term pieces. applications, be. is

Jeff Osborne

I And was helpful, in Spring an think of network the that a had Yes. for That's Or Silver piece? Itron pre the acquisition. upgrade it. that XXXX in, the electric Got Tom. that the is XXXX? put only is was network CenterPoint, legacy they through

Tom Deitrich

is. this it. the of Yes, side It is gas

advanced So endpoints terms But along and think the endpoints. the the It's it our about functionality equipment are in as with comms of plays because network the network themselves solution, endpoints. that really how the the it. advanced through. and it the gas it meter, And goes of is

Jeff Osborne

hoping is to any are made Got just and allocation suppliers issues, have that's it. up of redesign better XXXX? second half ramped suppliers been there the progress have that And or additional in in terms lastly, existing you'll the of or product then side on you qualifying capacity avoid your of semiconductor the some

Tom Deitrich

very tremendous that do Certainly, we've We still have support a on very, good progress said, environment. front. That qualifying constrained made multiple suppliers. it's on

supplier, well But with that being multi-sourcing strong of allocation terms of ahead of we be service up able we're years chain undertaken for do what allocation as to us. us two being effort likely ramp on that with serve that begins one -- on backlog have allocation supply few -- last believe rebalance, in that to certainly you're we will instead -- the being So the and to suppliers. that's

Jeff Osborne

I hear. to Great all you. Thank That's had.

Tom Deitrich

Jeff. Thanks,

Operator

Stephens. with We'll Tommy now question take next from our Moll

Tommy Moll

taking thanks my and morning, for Good questions.

Tom Deitrich

Tommy. morning, Good

Tommy Moll

back bookings quarter. the in I circle to wanted Tom, on

$X.X the same for there. but time Outcomes. it on XX% not time, the driver bullish At been sounds of Network bullish. you've were those quarter been And and maybe some You've like in billion bullish, a

potential going to from kind was rate in us year-end there. that to embedded a related, think walk I wonder could orders forward. I anything possibly -- that you So assuming book-to-bill, repeatability specific I quarter on the of your don't season-related, for back I anything calendar you're outlook that if mean, just just identify run

anything do that some to helpful. be Thank So you could would you. piece together of

Tom Deitrich

Sure.

see fourth the a nature in of So a to I the by buckets meaning come Bookings particular of in quarter deployments terms particularly big it don't of that larger we time some very do seasonal, or year. chunks. as or their tend in

So a bit lumpy it is little overall.

you're correct. So

it I very are of example. rate to the unwise per think ahead would of for breadth said, strength new pipeline billion That applications be that of and provide. of quarter, on us. $X.X that a run all that expect we a of just we do technology is rich And see of based opportunities the the

So guidance XXXX point, Final stimulus about that the us. seasonality. bookings what we to think, that pure be demand the somewhere quarter-to-quarter. also out, looks that though really of still will today I the government lumpy the I you give would bit will is bookings for on see are that bookings very is But short important little you is XXXX. a throughout are related environment the a run, to like point necessarily in environment that be and I caveat bullish none The blame wouldn't ahead what but of the that

apply will on which happen year, the for things, all opening this this the stimulus result grants the allocated be and in the of will various up when that government start will and during through year. how work rules defining ours opportunity On to beyond money US revenue somewhere to that that working for customers the of is

is as the So that's the guidance based today. strong opportunities I still not our on of for think future nor somewhere any that pipeline ahead is tailwinds year we us of opportunity. see

Tommy Moll

of to gears that do announcement you Tom. of referenced. you the you the with for How from how see I in a your you Optimizer guess, us be -- adoption talk that shifting going years? very as development to that needle customers? the of And in big adoption a you a long could Thanks, can level to about on curve? be And in or answer EV conversations the to Where guess, few qualitative, context internally? give is presume solution adoption tailwind can any Itron whole? magnitude terms about But Can finally, you been early. just or quantitative I EV what's next charging the mover hazard the had the

Tom Deitrich

Sure.

the the the and you the So up then be batteries, the around is started would optimize to Optimizer things EVs frame rooftop, that as these going begin voltage where complexity those of our to like dramatically to way increase all grid assets pretty so distributed And was grid way show on understand a to since and XXXX grid. solution, transformers, load to customers but plan low need types of able solar, are balance the those of solutions. notion portfolio we've and had energy nature, probably assets, also things time that mentioned, resources, XXXX, the that the things back

we've management that during portfolio the and been last launched years a We charging now the a small-scale the putting of of early on that this types couple things. couple ended place for with pilots very and in of up blocks So year months. some building Optimizer of all just formalized around doing

is is this as today this Energy about our it. interesting of to continue have commercial we network first a the what We signed number So really to Duke and pilots. all is, or agnostic. EV part The deployment customer look optimizer endpoint on add portfolio to

have those analytics assets. better, apply customer existing you has. Clearly, insight much much, the the into works over top that more we So of the it assets can any package

these deployed – the you today. have with have if you – already solutions can a distributed and Itron more that So with intelligence, network have an the even bit do we do quite

of proud all of an all fiercely about we've this So R&D done which organic fiercely, thinking we're on been of how to And these being it. investment, able was solutions. is with build

optimization your could opportunity guess. question, I of the – know don't hazard future rather, of that, point I last or terms In to a

and I resilient they of think in largest is that distributed service of getting And have challenges energy these the in problem resource management utilities face definitely the electricity challenges. how reliable can is today. one worse of ensure terms the

it a place as think opportunity. heading enormous I is So money stimulus indeed, well. that it's And is

a incremental So the think business growth ahead. years be Outcomes-based will and I it network for business our in driver

Tommy Moll

it Thanks, back. turn Tom. I'll

Operator

now question We'll from with James. next our take Pavel Raymond Molchanov

Pavel Molchanov

Thank much If limitless, be this revenue higher you for would my supply was component question. taking year? how

Tom Deitrich

customer than It's are that perfect I projects to that, today, where look where place number billion. a is. through installed I put have on lens say at to which that hundred guess sits is higher through guidance really are eager now that. of today, of couple our at million we me for the $X.X our point and our the I XX-month a deployment fill. it tough we in based lens would think dollars the on that backlog of capacity about what

So of is, a million second would some dollars is are the bit in a begin year. today. few of our where based we of the higher is, fill catch that on depressed in and what half a I terms That that first expecting than say, to and up hundred that our guidance half is to ability

Pavel Molchanov

Okay. segment? in the billion then zooming much how total, in And $X of Outcomes so on backlog is that

Tom Deitrich

Yeah.

I that portion Outcomes is we question of because that I types to and the But specifically. bigger spoke we're portfolio. Networks say Tommy's steadily forward that just do $X looking Outcomes the portion, haven't size We in in just is on Outcomes Optimizer growing. And to is the would today. piece – Networks space. out the the about that, billion continue business Clearly, broken really of that with in XX% the of products that of the is

Pavel Molchanov

very much. Thanks Okay.

Operator

Kallo We'll with take question Baird. our now Ben next from

Ben Kallo

my Hey, good questions. morning. taking for Thanks

we the next maybe year cost the to How about of as we think about build it moderate could just of you the more when some such that that? to reductions – on sudden, turn and through XXXX, like do back Pavel's a as you how Just OpEx, – just just – than it because a – here, and And or about question, can or components, of think maybe that impacts is backlog something is all cadence talk us year second, think following adding then into was we about you. your next and of – have Thank restructuring? you big have you spigot the a kind on, a first? the

Tom Deitrich

But Ben, out it that to on to three-year, billion roughly pass about in is a and along -- to I'll the is Once go see starts it kind way start, I'll it a it a restructuring think it generally period. it $X billion sometimes, in plays months. accelerate that maybe $X.X the the for deployment flow-through. but long Yeah. is start Joan a underway, our and that right as the that to customer that backlog, well slow, over four-year the then of backlog, tend tail, with project Of we next accelerates bit starts of deployment and you customers XX path.

very item be we The today. can next can and roughly we that supply So, at moment. hardware, the believe the gating that as fulfill let's ramp three-year do backlog of the able supply period we up is we the have supply based kind and much to component visibility say, over, on

Joan Hooper

about incremental to XXXX, look actually maybe million, majority think you actually OpEx gross line total. margin year-over-year I of if from $XX that of The though. somewhere majority in in $XX restructuring, XXXX If is million the forward it's is not that another it's to between million $XX in to XXXX Yes. the the The line.

et cetera. about factory closures, the So, think

Ben Kallo

it. Got

know I Thanks. now? reasons. that regulatory started us of where maybe, when Could stands And stuff of back there there then think the you a kind happening good we gross -- get and after we give were on and a what's variety so networks? margins an Tom, XXXX, update about front, component year just And regulatory to just shortages, for Is on shutdowns normalizing past delays the look at? I were when COVID,

Joan Hooper

Yes.

a take wouldn't Let margins, me Networks, at do but shot and I for the company. by it

challenged So, in given first first and continue half with the still are of comparable XXXX XXXX, they'll we in supply the very of them be say the constraints half to to of versus that would half the be year. last the expect us, I

does an doing flow what to bodes to think approximately now. rebalance dealing that well full with customers. I of But now. will obviously our level, Networks of to which company of have is can the is those from increases that the We're, would backlog the which perspective. for given we're right of obviously, XXXX Assuming future. cost preponderance year environment that are the everything think the in the inflationary We're the be it we about through margins than But start is that estimate best the XX%. second year, supply company. Again, higher average Networks get the the to kind anticipating, And half was close I'd

Ben Kallo

Thank you.

Tom Deitrich

And the during have regulatory on we with front, That regulatory normalize. seen happened and environment continues XXXX today. really the to respect

being That reliability addressing is, very So to well in communities cases made of interested more say, issues regulatory that sure a environment would less today. rate or are We I regulatory and types do their resiliency and make commissions are see normalized being served. decisions approved.

And is would would moving the So, right direction. as that infrastructure that environment regulatory I flows, absolutely the in money continue. suspect,

Ben Kallo

you. Great. Thank

Tom Deitrich

Thanks, Ben.

Operator

Instructions] EF question next with now Hutton. Chip [Operator take our We'll from Moore

Chip Moore

see about demand to Can guys seeing shortages you some what back of the component get Thanks. in half that on to Very maybe get the the talk benefit you're impressive stimulus improvement without you yet. year? any comfort

Tom Deitrich

The has I trickle. to of that as supply chain, decommits summarize the follows. slowed to today see it number Sure. a with really respect The environment we would

going goods. they don't a deliver being, a then something supplier the So decommit says with they're up when turn to and

just very much months supply very, So was say-do I'll say lead the of than ratio times reliability We it in several certainly long. see from terms a definitely better component ago. is

are not of lead There XX, going sort The could those So retraction Those XX XX, weeks lead remain of a or normalization be lead you on situation any yet elongated. times seen we into And number have keep that XX, times shocks the remains times just system. have yet. fluid. that long.

the lead those some kind the itself. remains the affecting back in not Again, the the that try first-tier with against suppliers deeper early as allocation of supply fluid. better have to that's understand it's have we environment our in times, of that but days things than And happened that from our because the that's and half where second we're operating a we through experienced we're supply suppliers, living into looks work the last So rattle and chain year long-range of bit half that we of what today. quite think in Omicron we chain, world, Delta

make got that to multiple But they available. plan with we've support watch is can sure that work continue to we'll So it component take continue really closely. of out qualifying We'll on we schedules and to that suppliers we every advantage our with to the that work side, have. customers sure on and self-help making projects

absolutely canceling backlog. with Our customers any are working not us and

supply So the timing-related use issue. for today. it is better we experienced that what a second But the than situation we half being basis that's

Chip Moore

That's ship booking this quick a Tom. there there your billion, backlog, through just XX to helpful, as a Thanks. fair And $X.X visibility. well, months book amount positioning year on follow-up get maybe just shift, of and and

Tom Deitrich

remains Europe environment sure on out watch constraints. the be be ship ship there bookings with to gated environment will on and is it in not ship book also see not the fulfill is But some would you happen and some in the always that We're even able product. good. position closely I see a has I The on believe certainly to book demand based hungry book will business of -- to But are that environment environment. and the make a environment, conflict for business following what and a business. what that in supply to healthy. been the Customers do great gated the component of

Chip Moore

much. very Thanks

Tom Deitrich

Thanks, Chip.

Operator

next our with take Johnson Stanley. from question Morgan Thomas We'll

Thomas Johnson

kind think Hi. change of I color just just had about the Device But presentation, and sequential of for in through set quarter? like as might the my on question year-over-year in in for Thanks fourth expectations the taking just year call first some the kind look a thinking Helpful of can maybe us you of well. side things. what path the And dynamics. margin to today. that help business margins half help us the in on the operating normalization Solutions

Joan Hooper

Yeah.

focus, just me let I So gross first the margin guess, level. on

as Tom of well. that a impacts Devices indicated, as of were that Networks, million. constraints but $XX QX, pretty again, of total the a portion in supply So heavy is Most

that the utilization factories, So, in issues addition in to kind inflationary creates cost pressures. of

to contributed the gross those the of versus have year. in prior in both quarter experienced lower the in quarters we So what would margin

forward. exiting Certainly in I work Going a businesses the we're kind second first forward, obviously, on higher expect that margin be we've Devices lot lower mentioned as of gross and again, would of to But supply half in going portfolio. the half, doing been rebalances. the higher -- the reshaping

Thomas Johnson

pricing at and of more one of driver clearly, utilization Great. well? is guys But recovery. the Understood. on basis. you But And recovery how might just maybe a incremental And that on, color be XH to any can what margin from can volume maybe, have big kind the add then, been you as achieve support a able XH this consolidated standpoint? and the normalization the

Tom Deitrich

Sure.

based on cost price working Our is actions. guidance definitely

there side where turns-based So along able increases better. much that are starting certainly We orders in. business, gear passed had as well had use price as component cost on utilization come new we underway is But the cost being today. pricing to a to number initiatives of

to terms the We that better are have now contracts so written a we sure our pricing the to it on about is are in working guidance. We're equation, contracts address forward. we make side difficult more protected even the based backlog on try how but of part pricing things we on all backlog. of side the indexing, is That of thinking XXXX going in

Thomas Johnson

you Thank very Great. guys much.

Tom Deitrich

Thank you.

Operator

are to for turn to It further questions. Dietrich Mr. appears I'd closing comments. back any over telephone there conference no like the

Tom Deitrich

couple you for thank today. of have I in joining a the look again day. great We And talking months. and next everyone to forward operator, Thanks. to you, Thank

Operator

conference. be an that conclude audio does afternoon. of again, once today's replay conference will And this available today's There

you go company's X-XXX-XXX-XXXX, replay can by with for at thank or can to www.itron.com. website participation. of the your the the dialing X-XXX-XXX-XXXX access or you audio You XXXXXXX, passcode We

now You may disconnect.

Itron (ITRI) 28 Feb 222021 Q4 Earnings call transcript