Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the 2023 Q1 Itron Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today.

David Means

to quarter welcome call. earnings and morning Itron’s XXXX first conference Good review results Deitrich, Executive update and Vice will Chief President and Chief first and Officer, Tom and Senior outlook. Officer Itron’s general provide and a Joan Hooper, Financial Itron’s business quarter President

the release call also Earlier the through and the corporate is information. today’s call This webcast a our a details presentation related available announcing its press replay and today, includes release to is website that Relations issued Investor results. company on also webcast the conference Accompanying under tab.

remarks, will the Following for prepared the call questions process using the open described. operator be

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

not statements. X, a duty of materially are to operating statements are as release making in discussed We as to statements be Securities because and Commission. These earnings those insight forward-looking May could are to uncertainties. XXXX, that All Exchange Factors and and made risks made future were any with will faith on company differ the provide and this call and any subject during do and these that in in Actual presented during our that current or our change of environment. from XX-K and comments call the and expectations update assumptions estimates Risk forward-looking results reports today’s may Materials current expectations we Form forward-looking. statements are and materially conference this filings other factors attempt presented today, based undertake our comments, well section of financial appropriate good to

begins remarks. Now X our CEO, please Deitrich, as of Page presentation Tom his turn to our

Operator

Tom. to call I now over And the hand

Tom Deitrich

welcome and Itron, to listening. morning you, Thank everyone to Good all.

our today, financial quarter review before thoughts. conclude the discuss I our quarter first I will final Joan For results first some call will highlights and with

These Our $XXX million. $XX XXX% EBITDA reflect a of non-GAAP in was of benefit XXXX. the increase environment XXXX $X.XX, supply first improved the first sequentially supply. year-over-year the of million quarter and per execution X% to earnings start results was and access Demand quarter improvement XXX% and component increased a year-over-year revenue to share to X% the solutions Adjusted our over our navigating team a is and for to encouraging. dynamic of grow strong continues chain

X, Slide Turning prior a for to to bookings first in the X.X, were $XXX is comparable book-to-bill quarter million of ratio which years.

underlying to a total solutions and we for of our face, for the The resilient on and increasing such investment. customers pride as water, are expectations, ourselves backlog As leader, drivers a city providing market billion customers. disruption, platform infrastructure the wide economy, need array global consumer energy, smart electrification macro in $X.X our the of differentiated challenges climate trend

no there’s approaches are consumer management higher solutions for effective, with enhanced products allow more well infrastructure to as of more customers experience. and operation agility that question Our asset advanced assets seeking our as increased and return

a and customer ratio new of target technologies the to for our while network-as-a-service consumers, we gas creating adoption take of prospects Gas are and this meet XXX per Benefiting next-generation will emissions business effectiveness. on year tons North Shore network never granted, is of while model greenhouse to this least such can bullish of significant their $X.X we This enhancing Although or expect book-to-bill financial leverage simultaneously million over environmental and X leveraged how Peoples achieve the X:X our long-term better the consumer offering are commercial example cost innovative to the Edison suite highlights to demonstrate The and network capabilities. In be working goals value with North partnership networking an customers solutions from Illinois, year Peoples data Gas quarter of Gas collection, service intelligence. eliminate first in Commonwealth Gas Shore experience. and measurement integrated distributed of by at as of annual savings. increase million

Duquesne Duquesne of XXX,XXX a platform. reality. Also solution, energy Light Service City of field to clean operations note, and will become will consumers the Company, Software smart Itron’s Pennsylvania IoT in Southwestern solutions Itron’s package as Smart including integrated lighting Light’s serving enable vision a deploy industrial Management

Intelis a achieved millionth also this of endpoint. milestone significant with gas quarter our X We the delivery

our scale. with communications gas gain infrastructure improving safety while capability continues As to integrating accurate static metrology and ages, momentum

Slide address and we to scarcity, business. pressing regulatory integrating the strong our meeting these robust will gas to environment some insights remains improving remain energy and operational customers turning X, themes while will the expect deployment resources, cover constructive. reducing have We Demand distribution safety needs, capital and I and long-term to environment be water as around related Now bold, favorable by utilities emissions distributed to persist addressing sustainability to anticipate this municipalities continues from objectives.

for but to deliveries Inflationary lead persist, cost buffering, appear trend increase. We be with pressures see of bore related to and in an measured and component deployment. the improvement. unconstrained form but volatility planning times continues undertaken quarter a slowing Semiconductor shows first system While in consolidation, and customer overall present, have recovery, mindset the to factory pace but fruit the plateaued, leverage. of product over supply These retracted to do and the improved the financial as a a global efforts return not factors thoughtful we materially quarters, of continue of have lead combined multi-sourcing, function portions initiatives, constrained risk. step component to are a yet the capacity chain degrees The plan inventory we to have uncertainty pricing rebalancing. as still past thoughtful expect more joint supply with most component not including adaptation

continued as create momentum rebalance. business demand the remaining should constraints chain and customer Our strong supply backlog

time to provide With that and results ask quarter. in spend some first Joan? quarter our detail the greater review of said I second will a reviewing Joan

Joan Hooper

Thank you.

our Tom strong supply As results component QX guidance. above drove increased mentioned, and execution

are we we our and macro continue dynamics in with to performance, chain remain pleased monitor market environment. agile uncertain an supply QX of conditions the face to While

Please turn for X to of GAAP summary consolidated Slide results. a

million last sequentially of solutions XXXX. to XXX quarter revenue higher for XX.X%, revenue year-over-year highest and of very a the $XXX was quarterly quarter increased on favorable primarily since for X% basis. product X% QX First points mix operational efficiencies. due was currency constant than year, basis and the and This Gross margin Itron

XXXX per million that $XX to in per year. optimize $X.XX the of share or charge loss compared income or with the prior plan decrease diluted current in period restructuring manufacturing a net our $X.XX GAAP further was recently share net the The million to will footprint. of Our $X related announced due

to from non-GAAP $XX Adjusted XXX% metrics Slide non-GAAP QX income million was prior quarterly for EBITDA XXXX. income million. $XX quarter Regarding Non-GAAP diluted on since the X, increased per or was the net million of the million, Itron EBITDA highest $XX year. This operating up $XX share. was for $X.XX

was adjusting C&I revenue comparisons our or X. a by Devices currency year-over-year. a on software access key Device revenue in Solutions more The constant currency. which to activity. us year-over-year business, demand. million, XX% gas We $XX was XX% Networked in or business of saw strong million, licenses, to million, $XXX constant After Year-over-year a mechanical $XXX sales constant for flat segment and by increase decline revenue a was was further on basis. currency. performance million million are Solutions components, Slide sale revenue essentially the enabled growth Outcomes XX% allowed was customer $X in million $XX segment services or $XX increased fulfill increase solution revenue

XXXX. changes versus $X a currency reduction in foreign in resulted revenue Lastly, million QX

per year-over-year had our EPS QX Slide diluted of share. per up had per Net XX, of Moving on operating to year. higher the profit. EPS positive non-GAAP from fall-through was a a $X.XX share positive impact performance the to bridge gross $X.XX due impact $X.XX Tax the prior share, $X.XX non-GAAP

count per share small negative share. had $X.XX and of a currency impact Foreign

revenue XXX with gross $XXX year. Turning review segment was margin of through to compared XX%. increased with margin million of and XX I’ll Slides margin results prior Device XX, operating the Solutions Gross QX XX% Operating points fall-through the percentage partially of basis of XXX operational operating improved higher basis a mix expenses. increased by to customer efficiencies. margin, offset due due the product to and gross higher points and margin

basis XX%. and Solutions was was profit XX% million gross margin revenue the solutions leverage. XXX Gross points mix XXX increased $XX basis XX Networked to operational of efficiencies. to and operating Operating million to of higher increased due increased and gross points due gross basis mix margin margin higher increased improved Operating operational solutions prior and and Gross margin product leverage. points from margin improved favorable was efficiencies. gross revenue $XXX points due XX% with of favorable due increased to profit operating Outcomes a basis and XXX margin XX%. year

to and XX, Cash negative were flow increases the Slide the leverage at quarter. of I’ll at due million. inventory. the was first X.Xx and end to Free the was Net and Total at QX. remained first of $XXX end was in primarily million. net equivalents million of at the quarter flat Turning debt $XXX debt end liquidity quarter, first cover $X cash in million the $XXX debt

quarter. available. served well to golden in to As us us strategy previously remaining first accelerate in last to invest shipments discussed, we raw enable components that material becomes the continue when screw This

to lower range repeat. sequential million. mix a million won’t please our $XXX about turn gross year-over-year anticipate be XX we quarter X% and second that QX midpoint $XXX Slide margin for of We represents The expect XX% Now favorable due to outlook. quarter to and growth second very Sequentially, between QX growth. revenue this

expenses were employee X. effective We that also higher April increases to operating due salary primarily expect

non-GAAP anticipate $X.XX share. For per share EPS quarter, diluted to the XXXX. compares per in be second $X.XX $X.XX range to in QX to of of This we a

that an hopeful represent look results We point the created our on momentum are during QX. to and recent growth build for inflection

and the While supply ourselves a economic in global have environment. navigate chain to position great put better deal uncertainty remains, a of we

backlog growth, accelerate management. continue and to we focus Our provides to strong cost opportunities disciplined on

Tom. call Now, I back will turn the to

Tom Deitrich

Thank Joan. you,

agility including capable year, market-leading scratched million to distributed are increase visibility and endpoints today, operational solutions, XX% a compared Over the only we’ve the last at grid and platform in DI X.X surface. intelligence, Our edge. enable service

to us of to energy apply as We with is positioned business opportunities total of solved The voltage proud technology billion the Gas, like resources performance innovative innovators today. are backlog by modern the to to new These be and only no better Light participate Shore solutions and pipeline usual. grid can’t of models enhance is of won’t Duquesne Company Peoples edge few a challenges low conducting address ComEd, partner opportunity joining the that our North some and of Gas, business and substantial at to than $X.X Thank are the distributed a you Itron. power one and integrated that for ahead. robust and

Michaela, open the line please questions. for some

Operator

now [Operator have you. We Thank Kaye. Instructions] Noah

Noah Kaye

and for can where to April we the morning today. we good I month with guess if into get to kind maybe taking happened the questions. of over Well, what us thanks March and are has of start

I of the improvement Can in in obviously think that the XQ, run-rate about and between kind think flow? us have you that the for story walk you the you the the component guide seeing how supply. sustainability and maybe late is February delta big you of through XQ improved what seen are here

Tom Deitrich

are the happened. pleased we operational The Tom We we unlock of things. was say in fragile The we so installation as But bit into would more the There a the to goods are customer. chain to able side that What potholes term, well see execution inventory global meaning of better about chain is hand in. industrial demand Thanks, or that out needed steadily chain that’s come saw definitely good led of quarter automotive as Jon And and and saw of a is we’re sustained if supply visibility I applications. on performance team side. with you there will, here. of of time in happen. turn the components on the we the where constrained out still there power what to is on in still do that team we in golden way is be there. improving, heavy few still the mindful as revenue, outlook specifically were What provided? we were come places, the you supply going about are indeed to and improving trend all to part for that what some that’s lack services second those anyway, is through, obviously had the on the that the road, that the to semiconductors short-term finished that that components screws waiting of supply during think guide a the talking on the pretty to demand We the pretty periods Noah. make forward?

Joan Hooper

think quarter, of extent linearity other that was and to didn’t get Tom referring was into to very, to able the late the might in it quarters the we we supply other when but Yes. got And come thing, get were I it in supply revenue, revenue. To it the very the impactful. in a and this, really turn have turned quarter

predictable quarter a more the fashion during key Just in getting it performance. much the was to

Noah Kaye

and obviously, what’s guide. sure don’t know guys mean on Is terms typically full And be XQ. year the thinking can XQ this I I correct? update the annualize is that’s back-half helpful. make of just Very results we XQ guidance potential anything I here. well, in and I well prior to Or want that going rate run about say, tracks? that there over is should in you

Joan Hooper

Yes. And short-term better on fact, has the one than it is short-term visibility chain is in improved. I of it’s Tom mentioned longer-term. things that mean the supply

officially You’re correct, to the guidance. we update chose not annual

We that in will do October.

But we good what say I annual in if now, not a suggest QX, better a will us. assumption a it’s And behind the having we August. start. bad to for obviously, one QX off a would in assume previous And would you to at position if our we QX, similar August, be look for guided probably Sorry, do above again, and more quarter guidance. which you numbers are we’re

Noah Kaye

you of within margins one the more these Yes. is sneak way that’s And can a the about internal for to in. that some to talk improvements divestitures. could and margins the Devices But higher some the sustainable? maybe if did extent from kind gross little bit I benefit they there year-over-year, drive perform to Devices obviously of maybe

Joan Hooper

Yes. they I mean was great that absolutely it XX%. got

they at lot is an gross margin. was One was last customers the element just One of business. were margin a mix we exiting more product XXXX. unprofitable extent components, shipped the I way think quarter been the sale there in toward was that timing lines. had get were in of the a all To key There XX% higher of QX. the though back a self-help. Certainly, was they

years, bit Our more important expectation much terms a absorption. of But getting little lot going forward to gross of the in the is margin. dip of volume relative Devices a was factories certainly, a last couple through certainly self-help, of in

Noah Kaye

Okay. you. Thank see. to Great

Operator

have now Osborne. Jeff We

Jeff Osborne

quick an understand license for the the I’m that revenue in comment Is on Jeff you takes a mentioned Hey, on made. or Device you that the A software in QX. or gross puts Osborne here. Networking and Joan, mix, that improvement less to trying margin decline question just side? the

Joan Hooper

little works part, affect was April. talking XX% OpEx, call QX, it I so maybe year, mentioned the was at a it’s I a also so From it’s while a I above in the about ago. that creates which it closer to was standpoint, and bit etcetera., XX.X%, be solutions it it favorable when say board. anybody very it QX. around in than be raises raises expect think that the mix QX, gross space, would Those probably be lower it or margin less that about is to for would went expect the In in year we more effect just QX actually a across QX. some and of in to issues. will would chain, Last services I gross about in supply it’s favorable little margin, talked I in I say I what Network Devices. and the

Jeff Osborne

just endpoints if appreciate the million X.X stat impressive. I was of don’t put couple the that past trying up perspective plus perspective Tom, the I give, backlog? to you’ve it. you Got many in DI is with able wondering backlog XX% but could the relative the in years is there. Roughly been I’m One detail it just rollout. you to are put DI endpoints, how to achieve figure. what in

Tom Deitrich

majority as majority additional that endpoints to look definitely X.X downloadable there and generation the technology. endpoints, our is out is That latest X.X total is more of of in And terms communication-capable million in $XX that the is backlog. total the that’s at backlog is of sorry, come. is pipeline of there. It which billion at on over backlog – Certainly, in and we the that opportunity, the applications dollars downloadable for solution, endpoint, the network

that this problems had service need and the deal on I in think utilities challenges they ground. past have with the what that leads infrastructure cities changes directly and which far is than It more fertile their is to They agile face. in territory.

energy As distributed technologies distribution place are that generation the impacts which the renewables come, well side the more things, like on into addressed grid, creates resources put on as more EVs, of intelligence. more are distributed with

Jeff Osborne

all Makes detail. had. sense. I I the appreciate That’s

Tom Deitrich

Jeff. Thanks,

Operator

now We have Alright. Ben.

Ben Kallo

Hi, guys.

me. that’s Assume

Joan Hooper

Ben. Hi,

Ben Kallo

the wondering seeing where does talked that And delayed you get then in when a network side. this you there. Outcome have just of I’ll Hi. out on the to but up quarter. to if Maybe It’s look on Congratulations on QX following great question progress. the the revenue million get that from? follow-up. kind that way being which just on and too, Tom, could at to on And I it we start because maybe is see about guidance outcomes margin, And $XXX if the mix, the of Jeff’s come low growth results ask end couldn’t

Joan Hooper

of QX mix I’ll guidance. in take the Yes. revenue the embedded the kind

grow, within the seasonally year. come very bit, actually was a a as QX in the little Expect was down come bigger the it growing to at piece and pie Devices business of strong guidance both level. that and to Devices sequential Networks and Networks growth Obviously, will a so both allocation bit. that is will Devices, in order For heat little down rate is expected they to in get are actually decent Outcomes. but so this

Ben Kallo

question too trending on the and how now see was we And that… Outcomes that

Joan Hooper

earlier growth. expect and Outcomes kind from to last if well year-over-year expect you at look certainly Again, quarter. Yes. comments Expect accelerating our of of low future, overall QX expect – yes, point see in we’re a a are deployments, your as lagging be and bit QX where to off the little but was growth Outcomes certainly pretty might to Networks year Outcomes about year. the I growth we happy growth all we

Ben Kallo

flowing on would then operating And in talk plan be what have maybe expense But terms could the the just expense one talk and you QX. think just about – that you how tracking said I could that’s just operating now? I Then of more. side, through last your in you right about and restructuring – up

Joan Hooper

year, plan year-over-year. and $XX plan. Yes. in there from announced will not The take we million X to the ‘XX,’XX, that in $X very OpEx. savings about of of that It’s terms a pieces impact from ‘XX. sold for between happen. of will main XX-XX ‘XX. OpEx Very million one or plan the and cost minimal really in additional year benefit The minimal split about that’s last are year-over-year plans, year of is in an that of we goods kind impact only Overall, which prior closures original factory have last the two in quarter are The the had real really

Ben Kallo

activity, prepared how overall bit at you should new the a that endpoints we do talked orders? think is new a so should of replacements Or within you too. about whole know for But thinking And remarks like it replacement and timing about and smaller about in of Thank could turns just orders, meters this market in the just market about U.S.? expect think I activity business Great. almost and how a new past the we you. about talk And cycle? just there as projects? overall then we

Tom Deitrich

are the business, and we globe. perspective, the or that is I’ll Americas a a take Actually, is our from The existing it we add-on network can largest America robust healthy already capability. call Ben. to one, meaning additional market then have installed activity see North added I all applications an Sure. market, mix around which of

distribution more the smaller You’ve That down of or response. automation now or to AMI as in deployment, much demand generally seamlessly move you lighting got you running street is add add-on and it but you business sort timeline. initial size add compared happens

in, Asia also play robust to in equally upgrades The the smart Americas. managing scenario we across In a to AMI lot I that in head down board, the of X.X integration see the it been a installation networks water and continue city both on us. initial an markets the We hasn’t to pretty and and focus see energy of themselves. Pacific, very We street has shown an Europe robust happening. that think space, in projects. market upgrades to or resource is active lighting market, distributed with looks larger path slowdown. All signs and for healthy And

Ben Kallo

Thank you.

Operator

Alright. is Moore. next Chip Up

Chip Moore

taking as Inventory to morning. was you you been Thanks components I ask those about you saw up termed of fairly Good the the any quarter. in golden screws it? stockpile wanted key Have the improvement able to substantially. in question. for

is Just that of finished wondering of goods. to sort much how close

Tom Deitrich

and what the are inventory indeed, they able to So and notion we’ve get sadly more are we Relative are golden hands know as of by. to golden that rare about we our come that that’s pleased they need. up, something hard of screws, stockpiling been is to on because

it As largely them, we turn we finished into goods. get

inventory not it to the of a meaning can it a materials take as in lot look that If is our raw goods. for are goods of you and get would the had we look finished in customers that of we of it continue at balance fast of eager we’re we to as it. the is was That hold finished as there – at it held sheet amount lot majority because quarter, as vast we the building on on, scenario end inventory don’t

quickly. We will move along it pretty

Chip Moore

guess helpful, a be opportunities mentioned would step referenced sort That’s backlog. function. being limits us just what remind And opportunities able my from of think follow-on accelerate Tom. there versus accelerate of think growth I are you of realistically? the not to Maybe But growth have just I the sort your on to natural to I Thanks.

Tom Deitrich

Sure.

in to first capacity step so That function to which some a backlog results. revenue measured goods lot a be the is to driver guaranteed, quarter, no go the about of capacity us. us. if in saw field. At component a but and components spot good I as growth last The within start in it steps with if we’ve We’ve you improve in build a by the it we into to as a it’s in point, would if to both supply if keeping supply. better component turn supply The a has there and evidenced at that is at able slim continues recovery territories rate burst up finished absolutely couple get towards it trouble do by than out of been would means moment. into job gate customers is that the in think the which deployment to quarters, there, absolutely from the we start Component scenario, of for want end the rather but for number is done think the the get of things to capacity something quarter, a rate turn that the QX parallel. is limited the the as I bit We been of chain the QX is were of a will think more process and

Chip Moore

the Appreciate Thanks. color. Great.

Tom Deitrich

Sure.

Operator

next Kashy Up Alright, Instructions] are [Operator now we Harrison. will you live. have Kashy,

Kashy Harrison

to Sorry. so taking think the what you gives indicated hearing Can year. that you comment And book-to-bill my likely from customers to that speak confidence to early exceed thanks you that in Tom, question. you’re the is X.Xx this Good your for make morning. year? you

Tom Deitrich

to things to the that EVs, driven of plenty year. which the of are the and Sure. of we likely use of streetlight city of we the projects, the of signed include to in of albeit are that number timing contract It nature. street, is by the There that or that address is regulatory RFQs when disruption, achievable smart climate a terms business pipeline that X:X opportunity, ratio happening into integration that the on RFIs visibility the new it And new us projects, things add-on and back-end see loaded we opportunities, have the gives as greater we a turn approval, that is confidence us believe for for on book-to-bill gates booking. it’s plus still perhaps like

Kashy Harrison

Device revenues can if then I’m two segments? mix the $XXX us those QX was Solutions prior can curious is were if been context my you. which I apologies there how the follow-up QX? during that’s to about Thanks but to today constrained to where in reference about based you on remind you it, for results. between and the And just and extent mentioned for know million. then question, there. think Solutions, are And this the like quantify in we prepared quarters remarks Thank or I missed Networked just

Joan Hooper

correct, I a not lesser albeit Yes, did mention you’re actually constrained be do key components, We rate. continue these by it. to at

a it impacted, the million million in in $XXX of revenue than million it to This last range somewhere primarily $XX it much was Networks. year, $XX quarter. terms You’re very roughly call right, was that, less year

Kashy Harrison

much. very Thanks

Operator

the to Q&A. now That Tom Alright. Deitrich, back turn will the I over our CEO, concludes call for closing remarks.

Tom Deitrich

for We can close the good. it joining thank I Thank call. Michaela. And there. Very everyone you,

Operator

program. the conference. Alright. concludes Well, today’s thank participation in This you for your

You all may now disconnect.

Itron (ITRI) 4 May 232023 Q1 Earnings call transcript