ITRI - Earnings call 1 2023

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Operator

All right. Good day, and thank you for standing by. Welcome to the 2023 Q1 Itron earnings call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers 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

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

any May our update estimates may to provide of financial and change forward-looking comments, and X, or are future in to current today, not any statements. we appropriate Materials do materially company All our attempt statements XXXX, discussed undertake and environment. good to duty made a forward-looking insight faith operating

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

Operator

over call Tom. now to the hand I And

Thomas Deitrich

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

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

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

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

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

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

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

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

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

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

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

do degrees overall While the mindset increase. Inflationary present, These to return most to risk. still pace but continues trend recovery, for as supply an retracted constrained lead unconstrained times supply plateaued, Semiconductor lead volatility appear but we the to of cost global a more and component pressures of portions improvement. related slowing and persist, a expect have materially the shows to rebalancing. deployment. are plan to as be yet to deliveries measured not factors step thoughtful component We not see of have system but uncertainty a function a continue chain with

undertaken have and including first joint fruit the initiatives, buffering, leverage. inventory The customer planning bore capacity the pricing in financial of the in thoughtful product factory form consolidation, combined efforts adaptation multi-sourcing, and with component quarter improved past quarters, we over

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

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

Joan Hooper

Thank you.

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

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

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

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

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

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

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

and We a licenses, in constant activity. sales million saw growth increase $XX or was million, Outcomes $X software in solution segment currency. services revenue XX%

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tom. turn I'll Now back call the to

Thomas Deitrich

Thank you, Joan.

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

new Peoples usual. to and to modern as Duquesne business can't North apply are like solved Gas, Light proud and conducting We business with Gas, Company challenges to models innovators and by be Shore that partner address won't technology ComEd,

Itron. The of Thank Michaela, of and and of grid some voltage the performance distributed for of questions. you is participate some substantial ahead. our that few opportunity $X.X only robust billion open no a for than backlog and energy is us low solutions pipeline integrated the opportunities line joining are please the These the innovative of at edge to today. positioned a the better total power resources to one enhance

Operator

now We Noah Instructions] [Operator have Kaye.

Noah Kaye

and guess I can kind maybe March over we happened the of into start of are to to today. month April get where us with we if has what

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

Thomas Deitrich

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

Joan Hooper

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

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

Noah Kaye

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

Joan Hooper

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

do October. annual You're correct, the we that officially to guidance. We'll update chose not in

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

Noah Kaye

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

Joan Hooper

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

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

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

Operator

Jeff have Osborne. now We

Jeffrey Osborne

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

Joan Hooper

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

Jeffrey Osborne

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

Thomas Deitrich

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

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

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

Operator

Ben now We have Kallo.

Ben Kallo

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

Joan Hooper

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

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

Ben Kallo

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

Joan Hooper

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

Ben Kallo

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

Joan Hooper

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

Ben Kallo

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

Thomas Deitrich

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

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

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

Operator

Moore. Chip Up next is

Chip Moore

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

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

Thomas Deitrich

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

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

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

Chip Moore

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

Thomas Deitrich

Sure.

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

Operator

Instructions] next will have Harrison. we Kashy [Operator Up

Kashy Harrison

to Can is you this that you year? exceed early likely that from you speak to that hearing think gives make the in the X.Xx so Tom, your you're indicated to year. comment customers book-to-bill what you confidence

Thomas Deitrich

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

Kashy Harrison

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

Joan Hooper

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

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

Operator

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

Thomas Deitrich

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

Operator

in This participation Well, program. concludes thank for conference. right. the your today's you All

may now all disconnect. You

Itron (ITRI) 4 May 232023 Q1 Earnings call transcript