Financial Data and Key Metrics Changes - Revenue for Q1 2024 grew 22% year-over-year to $603 million, marking the highest level since Q4 2019 [6][23] - Adjusted EBITDA increased 94% year-over-year to $76 million, while non-GAAP earnings per share rose 153% to $1.24 [6][46] - Free cash flow improved by approximately $40 million year-over-year to $34 million [6][46] - Gross margin increased by 240 basis points to 34%, and GAAP net income was $52 million compared to a loss of $12 million in the prior year [9][46] Business Line Data and Key Metrics Changes - Device Solutions revenue was $127 million, up 6% year-over-year, driven by growth in water meter and communication module sales in the EMEA region [24][25] - Network Solutions revenue reached a record $408 million, increasing 30% year-over-year, attributed to improved component availability [24][25] - Outcomes revenue was $69 million, with a gross margin of 35.1% and an operating margin of 13.1%, although margins decreased year-over-year due to a lower margin revenue mix [10][11][25] Market Data and Key Metrics Changes - The backlog at the end of Q1 was $4.3 billion, with bookings of $361 million reflecting normal seasonality [21] - Engagement with Itron's Grid Edge Intelligence platform is growing, driven by factors such as data center demand, reindustrialization, and electrification [21][22] Company Strategy and Development Direction - The company emphasizes organic growth through innovation and M&A, having acquired Elpis Squared to enhance real-time power flow analysis and grid planning capabilities [20] - The Grid Edge Intelligence platform is central to the company's strategy, addressing complexities in energy and water management [27] - The company aims to maintain a book-to-bill ratio of 1:1 or greater for the full year [21] Management's Comments on Operating Environment and Future Outlook - Management noted improved operational execution and market conditions for six consecutive quarters, with a healthy supply chain and steady component reliability [5][31] - The company anticipates Q2 revenue to be between $595 million and $605 million, reflecting an 11% year-over-year increase at the midpoint [26] - Management remains optimistic about the long-term growth potential in both electricity and water sectors, with electricity expected to grow faster [120] Other Important Information - The company hosted an Investor Day, discussing the Grid Edge Intelligence platform and setting new long-term financial targets [28] - Total debt at the end of Q1 was $460 million, with net leverage at 0.6 times [48] Q&A Session Summary Question: Health of the supply chain and manufacturing efficiencies - Management indicated that the supply chain remains healthy, with strong reliability of inbound components and slightly reduced lead times [31] Question: Data center demand and its impact - Management discussed the growing demand from data centers and how it influences utility planning and distribution network efficiencies [55] Question: Outcomes segment growth and margins - Management acknowledged that while the Outcomes segment is generally ratable recurring revenue, it experienced variability in growth compared to the Networks segment [36][44] Question: New market opportunities in Europe - Management highlighted growth opportunities in smart cities and automation of infrastructure, particularly in water management [72] Question: Long-term guidance and lead times - Management stated that current lead times are factored into long-term guidance, with no significant changes expected for the year [124]
Itron(ITRI) - 2024 Q1 - Earnings Call Transcript