Itron(US:ITRI)2022-08-07 13:51Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $432 million, a decline of 12% year-over-year or 8% in constant currency, primarily due to supply shortages [23] - Adjusted EBITDA was $17 million, and non-GAAP earnings per share was $0.07, down from $0.28 in the prior year [10][28] - Free cash flow decreased to $10 million from $64 million in the same period last year [32] Business Segment Data and Key Metrics Changes - Device Solutions revenue was $105 million, a decline of $43 million or 27% year-over-year in constant currency, mainly due to exiting certain product lines [25] - Network Solutions revenue was $269 million, a $6 million or 2% increase year-over-year in constant currency, although growth was limited by component shortages [25] - Outcomes segment revenue was $58 million, a $2 million or 3% decrease in constant currency, impacted by lower product and software licenses [26] Market Data and Key Metrics Changes - The total ending backlog reached a record level of $4.1 billion, with a 12-month backlog of $1.7 billion, also a new record for the company [12] - Foreign currency changes resulted in $19 million lower revenue compared to the prior year [27] Company Strategy and Development Direction - The company is focusing on higher-value network solutions that drive analytics and software applications, while pruning non-connected and commoditized products [15] - There is a strategic shift towards an asset-light manufacturing model to improve margins and operational efficiency [20] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the pace of improvements in component supply, expecting modest improvements in the second half of the year and easing constraints into 2023 [36][37] - The company anticipates full-year 2022 revenue in the range of $1.85 billion to $1.9 billion, down from previous guidance of $2.0 billion to $2.1 billion due to ongoing supply constraints [34] Other Important Information - The gross margin for Q2 was 29.2%, a decline of 140 basis points year-over-year due to higher component and manufacturing costs [23] - The company is actively working on product redesigns and multi-sourcing to mitigate supply chain issues [18] Q&A Session Summary Question: Impact of analog semiconductor supply issue - Management indicated gradual improvements in supply through the second half of the year, with a combination of redesigns and multi-sourcing efforts [43] Question: Future deals and customer behavior - There have been no cancellations in the backlog, and customer demand remains strong despite supply chain concerns [59] Question: Revenue guidance and component shortages - The revenue guidance was adjusted due to supply situation, with expectations for gradual improvement in the second half of the year [78] Question: Operational continuity in Europe - The company noted that most of its European business is turns-based, with increased interest in energy efficiency solutions from customers [94] Question: Wallet share trends and applications - There is increasing interest in distributed intelligence and demand response applications, which are reflected in the backlog [97]