Itron (ITRI) 26 Feb 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to Itron's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I will now hand the conference over to your speaker host Paul Vincent, Vice President of Investor Relations. Please go ahead.

to Quarter welcome Call. Earnings and morning, Itron's XXXX Fourth Conference Good review results Deitrich, Executive update and Vice will Chief President and Chief fourth and Officer, Tom and Senior outlook. Officer; Itron's general provide and a Joan Hooper, Financial Itron's business quarter President

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

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

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

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

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

Page presentation. Now X of our please turn to

his remarks. As our Tom Deitrich, CEO, begins

call. you, Good our you everyone, joining to thank Thank and for Paul. morning

segments. and operational for results quarter supported Network improved Solutions expectations, fourth supply customer of the strong quarter, ahead our single record and balance financial revenue Outcomes robust During chain our execution, demand including

The XX% million an highlights of revenue adjusted of $XX free which for growth of Non-GAAP $XX performance were year-over-year. of of an $X.XX, million, earnings and share quarter XX% increase year-over-year. million, year-over-year million, $XXX $XX of to flow cash increased XX% the increase fourth EBITDA per

X. book-to-bill Slide equating at billion. year-end of brought of cumulative X.XX. for quarter backlog bookings $X.X $XXX billion, total to million, the to Turning and fourth ratio Bookings XXXX to $X.XX a our was This

Our need customers the to experience. face resource due consumer to related demand, pressure and challenges climate increased improve sustainability and

provide Intelligence concerns. also needs track breadth a bookings to approach these during of platform world. Edge customer the diversity The magnitude has fourth and the utilities Grid around of proven Itron's in quarter of unmet addressing record the reflects

and was award consumers. who X.X territory, largest contracted rollout an in advanced Massachusetts an network Our Eversource for million booking Energy, from covering endpoint their

and of software add Edge multi-application for Itron's XX years we deployment technology includes to program across associated Eversource Itron, managed another The large intelligence. territory. distributed with services, look Grid award services to their and supporting forward This value and is

endpoint capable together Grid platform, Southeastern cases. DI to Itron the agreed and future-proof intelligence generation will of network a Itron and solution TECO's have Moving which Tampa to simplify for the and controllers network migrate U.S., Canopy prior to use Artico latest work to a multiservice lighting new from Electric our existing networks Edge

intelligence to be is more consolidated consumers. intelligence, of the leveraging TECO able ] scale. the location scale TECO applications, deployment adopt recently iris increasing use to and network and [ intelligence Edge the and and continues service introduce resilience distributed will value through Grid embracing their most to Itron of distributed By

modules. of consumers. than network the of natural will gas increase the the communication Gas, Gas through ONE help consumers. intelligence safety This and their services to working their Itron X.X for million be will of enhance a reliability, ONE Further, project with ONE deployment of more Oklahoma-based will next Tulsa, accuracy Gas generation provider

interest continues and demand constructive, XXXX in new remains technology Our to for accelerate. outlook market customer

We anticipate XXXX X:X. bookings will result in a at of book-to-bill ratio least

benefit years. that do customers anticipate from investment government the funding IIJA flowing accurately programs, through observing exploring to in quantify, could will various we these too some programs. are early We although including of infrastructure IIJA XXXX And include from actively projects bookings programs benefits contributions with subsequent

environment. Slide X provides insights on the operational

strong interest We with in a of continue see stable opportunities accelerating new pipeline to technologies. customer and

digitize Edge a rapidly agile are Intelligence more customers infrastructure, efficient to reduce pressure enhance by become Itron's asset growing visibility improve consumer will Our and Green and Solutions critical to experience management, requirements changing facing to and through adapt world more gathered inefficiencies.

has Component This previously fulfill has critical more inventory of in build light the a supply of constrained and and landscape. revenue meaningful allowed and improved to portion uncertain potentially certain become more has predictable. -- volatile of is Itron global components

cost improve XXXX, gained price traction, were During results. the our to ratio efforts pleased we with and

needs our the increased of flexibility for needs will with customers. forward, to business our regulated Moving pricing predictability continue we align

XXXX, about full outlook continued $X.X as I well results, fulfilled during XX% Solutions margins expected Network does Exiting which fourth as XXXX, primarily to of provide be the approximately Much backlog billion segment. to compression for will help our and event has our been now the volatility. Joan cost the our details ask in get or of repriced inflationary of margin is to backlog address year XX% indexed of remaining in XXXX. quarter

summary our results, discussing full Tom. review guidance quarter GAAP full the Slide financial XXXX first before to for Itron's and consolidated you, quarter. our XXXX for Please I'll turn Thank for the fourth year results. year outlook and a of X

basis last product mix Itron's Gross revenue. gross related XX% highest Revenue $XXX increased XXXX. margin volumes. year. points supply to up increased previously and and which availability, of continue to catch was execution revenue primarily on component operational versus strong to allowed last supported XX% by This margin was XXX to us of quarter constraint due growth favorable million operational year, Fourth than since efficiencies higher was increased

expense. $XX or year. compares higher share diluted prior GAAP diluted the partially per $X.XX tax $XX million income, net million income higher by driven of improvement $X.XX was or offset to The in share, per by operating

of on million non-GAAP metrics net was $X.XX $XX increased doubled operating Adjusted the share or income million year-over-year. X, non-GAAP of year income $XX $XX Non-GAAP million nearly year. Slide diluted for per Regarding prior versus from quarter $XX ago. the EBITDA a million $X.XX

sales growth. ago. in quarter non-GAAP a all-time region. Slide year-over-year was growth communication $XXX Free revenue million million Solutions EPS. This an currency our basis, of increased X% million segment high Device improvement significant in was in by are $XX $XX EMEA on by million or X. meter and versus for business on reflects a The module cash constant earnings driven revenue negative comparisons $X flow Year-over-year water QX year

improved of services. million million revenue to X% supply year-over-year. conditions, in us of Solutions increased Growth due and to continue increase or constant enabled in chain revenue. was to XX% increased up Network by which $X currency, an catch revenue on primarily $XX previously allowed $XXX million onetime Outcomes constrained recurring

impact our tax to by gross per EPS on $X.XX share. by non-GAAP $X.XX Pretax non-GAAP year-over-year XX, driven higher Slide Moving $X.XX Higher expense higher partially $X.XX contributed share fall-through to EPS QX year-over-year offset increase expenses. year-over-year per the of per a the increased bridge of a share. operating negative profit, had performance operating diluted

of year. XX was Gross margin million, revenue XX.X% gross Turning review through Device XX.X%. was Solutions I'll points margin gross XX was margin results nearly margin over the points, higher XXXX. margin highest value up the QX to operating QX Slides efficiencies. mix year-over-year, operating a product was and up prior was since This XX, quarterly reflecting XX operational and segment's $XXX with and Device segment was compared

million basis due new mix basis margin XX.X%. Outcomes a margin established margin margin $XX was due improved a gross revenue million XXX and quarterly gross favorable was product increased down $XXX record licensing points of XXX quarterly points, up of operational operating basis and margin revenue operating basis record of efficiencies. to Gross Solutions points software and to margin a XXX XX%. XXX mix year-over-year Network and Gross year-over-year, was points, decreased was lower also activity. was and

create discussed, period. a previously have variability we relative activity in to period licensing from software As of quarter size can the

XX% a improved estimate constrained of revenue, than $XXX recap at faster year revenue availability the conversion approximately had please of XX. substantial full revenue of to $X.XX of a of end For to XXXX, XXXX, We by billion, million results, supply constrained supply been converted as previously that versus turn Slide limitations expected. XXXX. grew was XXXX Revenue supported by during

pleased increased addition, customer we with intelligence adoption In Edge were our technology. Grid of

versus XXXX. of per operational revenue, $X.XX efficiencies. or and in Gross compared XX.X% X.X% Adjusted increased mix XX.X% product delivered record segments, $X.XX Non-GAAP million with or XXXX. to and EBITDA was year-over-year basis margin favorable was diluted share by in XXX due $XXX points of earnings million in Networks Our XXXX. Outcomes $XX both revenue

year-over-year to earnings, Free working The cash taxes increased prior to was increase capital paid. million in cash partially higher growth due $XX in the of flow $X offset and compares million, by year.

Turning I'll end liquidity to fourth the at Slide quarter. and of XX, the debt review

$XXX end represents million. XX anticipate year midpoint, and billion. $XXX fall the the Slide leverage equivalents year-over-year $X.XXX Please X% guidance. full a of was financial QX and XXXX within debt At debt at billion XXXX revenue approximately to net million to $XXX Total X.Xx was to We million. was and for this of were Net cash range turn $X.XXX our growth.

supply-constrained the timing at looking the impact to revenue. rate, factor of the when of growth consider, catch-up important previously An revenue is projected

to recall we supply XXXX the of we due constraints. entered availability that we knew improved. We lost, not were deliver, to be and revenue, able may You to as component was million $XXX unable supply approximately with would it convert revenue

XXXX. estimate that half $XXX mentioned, occur remaining we XXXX, of the we $XXX As of occurred in just and first will primarily the I anticipate in approximately million million catch-up

XXXX per approximately of year to of the range $X.XX year-over-year fall If XXXX share. you $X.XX non-GAAP to We diluted and the share would growth per XX%. catch-up for earnings XXXX revenue, rate X% a be within normalize constrained expected anticipate impact of full

the of normalizing timing At guidance of amount and tax rate for rates and XX%. settlements. year-over-year EPS on tax The of expect for could both rate Quarterly earnings EPS an range the full we fluctuate XX% of based XXXX the assumes approximately the to mix this midpoint XX% tax growth effective and the jurisdictional years, year.

share at $XXX our turn is first the after increase quarter quarter QX tax Now the XX We to of a non-GAAP $X.XX a revenue per XX% midpoint. growth to range Slide approximately $X.XX which to normalizing diluted within within for at to the to We anticipate outlook. XX% range a share, be rate. per be year-over-year $XXX first million million, earnings please of anticipate year-over-year for midpoint

manufacturing execution. amount greater-than-expected a to of shipments XXXX financial ramped Our reflected We results better-than-expected constrained to to customers supply strong reacted component convert us quickly and output operational supply, enabling demand.

XXXX begin strategic Our teams and considerable We're very growth profitability. momentum improved with we and our to XXXX and with pleased pivoted performance flexibility.

I'll Tom. Now the to call back turn

technologies, Schneider integrate that new recently does Thank equipment. partners, its our available have Intelligence capital on modern platform. of Edge these conditions. largest and technology. is grid and most The complex the you, accelerate need be turn optimizing greater visibility The possibly Itron least To operational Joan. Not with into only X modernized, undoubtedly energy match that it in increase solutions resource is investments industry-leading intelligence with enables the at machine co-innovation needs. the visibility to Edge as readily an robust the to with but this to in years, will distribution cutting-edge demand customers not announced give happen decades, over utilities needs and to critical time and capacity, connectivity in work rapidly management, EcoStruxure the grid adoption frames broaden and increase. Itron's we in complexity which Grid continues physical solution and while our Electric's will in combined Grid scale providing control planet solutions

This distributed simplify for both value The designed digitize management energy management. energy demand collaboration landscape. supply will challenging and of an is resource sides the initial increasingly the step to against chain

With portfolio intelligence to integrating in business world. Microsoft, Itron needed open of into enables solutions. natural data to changing the This speed Azure of processing rapidly a support of access secure, utility our outcome Microsoft is AI language

limited specialists. quickly more intelligence is available decisions. With data will longer be and this managers for automation critical science business all collaboration, information or business IT to actionable engineering to of No

and Renova's to data we Edge build integrate announced control room software plans ease the connecting Edge to Grid integration collaborate the grid OS utilization X data real-time and Additionally, Grid of our GE model utility for for orchestration to from recently to Solutions unified the the by with data a Grid insights Intelligence operators.

control as operations processing the energy the system unlocks data from Edge the grid ability visibility and resources and distribution and home. previously Grid and with will operationalize identifying well data for latest ability inside and Fully visibility grid from Edge access Intelligence optimizing close to ADMS data issues resolving cloud-based gaps to efficiently. learning edge prevented securely outside distributed Grid Combining cooperation the AI the the the that as machine to utilities quickly requires capabilities. with and

between Itron believes industry and essential social is modernization, required economic leaders to prosperity. to collaboration accelerate grid

We our New on in will York NASDAQ City. of March upcoming more discuss these Investor arrangements the and Day XXth market site in at

We business understand why customer with portfolio of we supports for trend our seeking that expect of investors innovative expectations. to believe of solutions multiyear our program growth will at helpful an a intersection we are be technology, wide-scale market positioned the demand for and our

attending event through visiting in broadcasting via with webcast to forward and the look everyone itron.com. We be person also will

registration details. those in please interested contact For for IR team participating, our

year a call, Itron full XXXX. To recap strong and fourth quarter today's had

at the significantly and Our a across organization improved results. level delivered executed teams high

annual Our the backlog levels. Outcomes while that awards drove earn at margin year, through near-record Network and records, Solutions continuing segments high-quality expansion maintain revenue to we customer set our

While volatility joining there continued to XXXX. ahead, may for please perform you the in Operator, have some proven to today. be capable open assembled team has poised line strong for in that a is continue we itself and world Thank questions. the

first our question, Instructions] [Operator of nand Kaye Moah Oppenheimer. line from coming the with

the Or can Is across to Maybe I the first or think of it high the Networks? in nuance and the actually, that think way Outcomes sort the we guide? in kind that? devices that's would single Is embedded it? the how to quarter. how start be Great flattish think digit segments about right guide, of with about would you growth question

Outcomes growth, Yes. flat. This kind year-over-year double-digit devices low Devices, a digit. expect and is in high is growth the standpoint again would And like more Joan. bit I would say be but in you Networks relatively of little of from the would single it's

about continuation affects the primarily you that's the Network where if think Networks, catch-up of the segment. So revenue constrained of the

the that of happening in most first to rate run the in of think I half the kind half. of a back that of revenue back And Right. implies That catch-up perspective? from sort growth is we're year a underlying

Correct.

of million in correct the remaining be the catch-up half. again, the So you're that with should first $XXX most

to And so a unpack of mentioned that you how margin bit a trends there's plays going into couple little things because on.

you so right rolling that revenue that but mix catch You've still is Networks mixed maybe and the have a got on this of backlog, should some year, old up through disadvantaged accretive. be then kind of backlog,

over So kind margin about what of just these some get like, to kind different of of we the past help And look us understand trajectory how course year? think a cleaner the trajectory items? of might of margins once the

Yes.

bit to margins a your second little below implies overall first guidance if strong be first lower for would sequentially aggregate. But And than I would about of expect would QX about be QX. margins. expect margin quarter. QX say kind it a half I year, than So would the in the to point, be slightly very, to very XX% QX. I higher was the I half think comment

the Okay. we and prepared us applications only Tom, program cycle understand in November. it like are help for looks in GRIP but from in you just fund just the remarks, DOE for IRA, the mentioned IHA the opened flow where

are to activity see to related So quoting programs? you specific starting

question. Good

the the correct from lot now. of are in government to going obtain proposals that grants are You a

the is That an in flowing fourth happened awardees award. of round mean first the doesn't cash The quarter. yet. That's just

during flowing would means see on our So XXXX. through terms for proposals customers lot What will activities are that projects that expect and in it that working we I of a for but of we revenue and XXXX, with -- be in probably 'XX revenue a expect in will the is in of material P&L, our comes XXXX, of bookings that I terms itself. the amount don't timing to beyond in there

Johnson And our Rice the from of Company. question coming line with next Malloy & Martin

more revenues revenues should the that that on increase year, how Outcomes think quarter. of saw impacting about Network around pickup, terms and in strong the solutions? And the revolved timing and last My Solutions question Congratulations deploying first related you of beginning in we endpoints?

catch up. and I Thomas can to free are then start Paul,

XX-month anywhere you'll the from So kind XX- are of a after in see deployed. of terms typically, endpoints applications to lag, Outcomes

see constrained revenue come correct. that So to Networks, you're and a was through. has started We to of really this started lot

months XX So to about XX think that. beyond

Outcomes different would thing of other mix I caution type The just a though is is businesses.

We have have managed of in services we there, And course, distributed the license then, we have revenue. on endpoints. applications

So X it's of really all those.

the anywhere up after are to don't got you've terms months you're that model think that going in anything deployed. I it if Tom, else? of to know, pick would complete to correlation, way. expect points XX from So we don't a But end would XX ability I that, see

stated, Joan. Well No.

second they're impact maybe give Okay. we question, timing us look they you've like in Could little more announced here, results? terms partnerships important. might a My the your color, collaborations, they several partnerships in when they're these you see like look of of

do Happy Sure. to so.

across let come and to context connect your extremely put the We we and the to grid visibility way distribution create the things the endpoint is itself. meat to to take So it try question. and down play, the system, that a in higher grid the happening then to where the from in up fundamentally, up all mile from collaborations full last the step me back of are important think normally ADMS meaning

X You it. notion of full that of can't parts solve without connecting the grid those problem

the and with that So announced Renova with we collaboration. work around fundamental Electric really Schneider that GE that is both

generative power to has utility Additionally, to do the collaboration data. Microsoft the bringing AI with of

you when capability X/X with there's a use do are productivity about way. substantial a AI, possible, and be doing that responsible something of only in can really Today, gain utilities that

really the and is we that themselves. about those enable collaborations secure what with Microsoft a responsible way collaboration how is do all So in

each customers first in the with those working right of We're now.

days. things. Light we But I in in releases past some hear going the on with -- are be the the couple & and through Vernova those You'll release customer press went initial flowing that Florida beyond. the year in Power the results happening GE And during expect out I even think the XXXX product in to collaborations activities now, would and mentioned of and

line question next Cowen. Osborne from coming TD the with our And Jeff of

onetime wondering, side. Just the I Jon questions XX% on a Tom. catch-up rate a was I there I growth my just robust backlog a And wouldn't mentioned would look to think why we the as side, as into rate similar rate XXXX? the growth semiconductor relates of you was me normalized given have anything have growth ... couple it without wondering, out XXXX, on is excuse

me just clarify that let what XX% represents. Yes,

to the we I reduced the by to So is $XXX compare did million the we provided just of took what catch-up then XX% booked that get catch-up. and by the that midpoint million revenue $XXX XX XXXX reduced of guidance, it and

years. both So there's in catch-up

-- years, we So both that's got we took how XX%. normalized and the we

ago $XXX et decade voice apologize, on it. the But you about getting TECO, legacy about X.X migration from solution, the $X.XX I'm the X.X do had and million CenterPoint, are if my or losing X.X Got the I spent upgrades? -- X.X how dollar And PLO, a we think at hypothetically solution on do here. on think the to you cetera. customers then with how

Right, right. give you your throat. clear moment Well, I'll to a

-- is X.X. going allow but the really different of what's really to that it underlying to as more of sorry, there question, is And migrating efficiently a a different as think to X.X, capability latest set X.X. to greatest of technologies the applications. upgrade X.X, much to there. The I and X a got that TECO a version were across part record X.X to everything scale on was Think not think just I Jeff. X.X the it

it's -- of That So a they're terms to really little I where capability, the question, to a it's the not X, a a headline in in said, cleaner to X going. but protocols AMI, think so X.X the that it's a application, your terms that, are you X a bit X%, varies really as to that of in somewhere X more could X%, little just than have Mileage bit was in range, X%, higher return you make getting typically. operator simple but some an was probably were it bit, that a typical. on underlying

a the X.X, more that applications is a you bigger. to on get you In the The the return more common set pile infrastructure, much benefits of much, accrue.

better substantially cycle. that cash benefits, a percentages go in So a way, and more as than saw meter the X.X are We the single-digit higher generation an automation register cash of the in the really it's just investment to initial far incremental find to a we applications. you to accrues add applications

our Kasope question of coming the next And with Harrison Sandler. line from Piper

back So go I one, to my first the to just backlog. wanted

on us the sense think lower-priced being And XX% XXXX flagged drag backlog that then all margin should just side. I'm indexed. were a on repriced XQ results the tied what proportion playing you in then And you maybe -- obviously, how the about XX% think of I generally, to we of the other there's drag guidance? Can lower-priced backlog? margin the from give

margins I if started had for we pre-pandemic components, had clearly, costs mix pricing, was levels, QX. to don't XX-XX say we've the that was costs could through meaning well this just stuff back older there materially more know to answer in of in in not that have in the the give QX. yet. on a to as I would there, a more stuff the recent split, ease less it the pre-pandemic Certainly, as I have than a overall those we QX, flowing perfect component of run-up Yes. substantial point

bit more you terms from that dynamic that margin compression answer segments give pre-pandemic backlog. But on the in margins the Network think the precise little free an off-the-cuff numbers. probably are of segment are in other do most to a I affected difficult So

Got it.

of highlighted generative Solutions. then enough. you And Fair AI portfolio the Okay. your of to my question, Outcome follow-up integration

AI in higher are you be more improve financial expect the expect But you do revenues? -- you win maybe to to the across the Outcome your expansion -- services will you board due Outcome speak clearly, will Are margin to So the business within the to can AI. when specifically, then the or impacts, integrated, segment? And the customers expecting all Outcomes of open to fully business do segment? you use

Right, AI inclusion as equation capabilities data can well Microsoft three the suite more that think there. margin. the provide better collaboration a space. Certainly, as way, the as refined where as learning as in We we really that the the will into of you both machine to of different revenue I capabilities, definitely do parts well about believe it right help is a do with copilot way thinking utility secure it it in the and

enable The a is customers faster faster it they that a example. hosted will So it. flows which results cloud-based on first-off to environment, migrate adoption, is I margin We're customer of accretion. Azure, P&L. in I the in think anything it it is business, think able accelerating going terms going in Timing-wise, the revenue we to to to and it's for through how consume be depend

XXXX insights -- think the be. you'll something data where of can in power the you of initial what work natural to get it's hallway results. revenue There's in decisions But department a do being the and say, it's so a faster. the of not That's make terms start I to me much is the to see to out to IT better really story, do the pull down would engineering speak for able report to instead power the office and running in lot computer language why this, have write or

maybe And the my color final I then question. there. appreciate

and bookings, backlog? imply a one-to-one, you Your guidance bookings us year-end X:X would you recovery the for bookings through guidance that QX saw at then X:X you're help least Can nice for think XXXX. XX-month highlighting in what

Yes.

gets be also booking so depend I the than we a is it based the more XX-month than schedule but then backlog. that on schedules one to able number booking signed on schedule. do award, backlog and course, to to regulatory that probably more think contract Once itself. defined, is oftentimes it's a there, put of Recall, we into deployment deployment booking, so when deployment approval, customer going require customer

is So and we I and thing. strong a likely XX-month good that And Throughout that to stable to backlog environment. that stable expect remain demand which demand expect is strong, would XXXX. reflect very

And line our RMM. next question Moore of coming with from Chip the

I high how attach numbers about and rates a way wanted backlog? about Is I We've have are been those out in those service XX% as, there. software rates. and recurring so as to contracts think attach or ask trending to how heard think, there

services is I right our software over today. drive to and our revenue time. around think Attach to rates somewhere continue up total XX% XX% of revenue that

number of that it. The majority and software it's single think some services software vast about not with hardware, exact associated include a not bookings bellwether only the So services but deal. probably a is portion to new and And a deal good there. varies to lot

we to get the itself. to that services Network amount of follow-on It's that very bought as that detach for for deployed do in adds activity good And on exercising good services also deal it it's dependent a initial have and substantially the portion software is than software individual help in the the itself. we but they deal ways business higher the company area, What know of in we is is once the is customers, and that just us, for itself. they're assets the communities, their multiple the

some stuff? do some of volatility, we enough think have Or more have we Got that And, some out component you've been that side, on helpful volatility? I Tom. been to engineer you some it. able do challenging hand, get on if it. you get able confidence, you just the good That's color, maybe to mentioned follow-up, you as a you think, components. Joan, have comfort appreciate critical guess if I your I the stockpile

chime please Tom, then and start I'll Yes, in.

And is built we that decision you So some gone yes, sure we over year, resiliency. invest the look supply and strategically up really a to is quite make past bit, a our if inventory have -- chain has to in inventory. made

point, feel things not so that. sourcing about more supply their good And including initiatives we're providing this we the But chain to overly Obviously, chain supply robust, continue to like projections we on at work for shortages dual make and with components. concerned 'XX.

our line of next the question Stephens. with coming Moll Thomas And from

the start my with a idea environment, constant? in is Is hold beneficial gross there? year-end customers. point And follow-up made on really, you to I is a underlies changing to question you're dollars, or the about negotiations repriced wanted your to indexed those to mutually what that backlog. Or hold margin the trying XX% the understand with those of constant arrangement having gross philosophy the percentage to that about profit get underlying to try

sure customers, the Well, certainly, when with and for do have when for we how value the That's that. good discussion solution make discussion. to and of trying we we a that customer, shareholders It's us for good good we're are we fundamentally it's our we the have the provide. selling

We've the were where benefit to price we had take largely to in rate, volatility can a a our rate where live work able we fixed they're indexing we are and can lot it renegotiate. can the price mousetrap regulated than case certain with largely and where go up we looking go the customers they we is -- in. to worlds tends a commission a not minds. we cases their for their into we a world the customers it our way is often, make structure if put tend If do right got of rate coincide those utilities, they in done certainty largely Because better competition most contracts, for the on have inflation in live cost with develop of to it communities. world how they That's to that so can side, X

negotiation that have that business. comes provide help ways deals, to try have to you we can When with to for incremental customer to that in those that interesting there value XX%-ish and the a solve live we for customers do so within That's the we how rework referenced can our look new Is that, their but way prepared we remarks. construct still do existing again, the they problems. that remaining it

So we sides. both much possible as try for to make a as win-win it

helpful. That's

midpoint "normal" and earnings the If year of the we difficult it's XQ, XQ historically, I what which to take the I that rich, the the embedded contribution if follow-up, think while a contribution for And XX% you've we skews ask quarter. outlook a question might know XXXX, As outlook. wanted a some in full bit little just from looks shy imply like, to just first quarter EPS on it's midpoint XQ, first a look provided. conservatism

comments provide you could helpful. any So would there be

of Yes. said which going that earlier, of little The like as first the is of skewed would occurring half first catch-up half. bit what half, a normal in second of look is a progression is $XXX to primarily I would I a only thing what revenue result million in XXXX, be comment a

second result, would So And flattish if to you think than about that revenue that, as half. the in normally first it second catch-up you're kind end normal from something with rural a more looks more have half the half. going without of up look you to

from And with question, the Kallo Baird. line coming of Benjamin our next

Congrats Tom and and Joan team.

the I the partnerships partnerships in any does home does how partner? -- past. acquisitions business? built And Just I'm asking other the that parts about talked quickly, that is you congrats what think strategy of I do -- Outcomes for -- you've around about Tom, change or the your on with guess acquire or of the guess, Outcomes,

don't able I It's that. be and our to add with at Ben. change No, we with high-end for do to that's by look partnerships it's that ADMS partner We looking to firm technology, market, served strategy weren't would the there Thanks, the partner same there. see to get into the The our better better large language to these portfolio others, into appropriate to models. all.

Let's we extract partnerships overall. those do think that that. our customers for can That's when those about value we how make we sure

technology very comes continue on edge customers we're multiple to to intelligence itself, across focused us we overall. can scale primarily that capability, you adding it is for market should acquisitions the solutions to look scale When Outcomes-related where

book the we past looking -- for this what when in think that you and play can How year. think between for about in bookings the then have quarter just And and visibility does Outcomes and you booking, good mix Networking QX QX, the very out I I think assume at the you it?

actual to -- Outcomes. be had The will between Networks the split The is majority ways of vast we Networks look of Two Outcomes at in million and The true and XXXX. that it. that in again $XXX bookings QX, Yes. heavier outcome be inside of see work the on with split happened a We'll bit XXXX comes number, the QX how varies to exact The the side. little themselves. a bit what we looks contracts quarter-to-quarter. to down like. customers for

us to then you 'XX, anything right Could there a just savings rightsizing a size. have and in 'XX, update there's Like where -- just costs won't journey manufacturing from manufacturing? you year-over-year and from benefit the on until been of happen rightsizing are And from guys I or then? getting if from benefit know you any footprint, long your cost

was I say. going to Yes,

factories we -- and about have in a won't to ago, the we X close So announced end of closing 'XX, we plan tail early the have 'XX. they year

And strategy answer as those a once in the factories it's on 'XX you yes, we've to of been is be So there versus manufacturing mentioned, some benefit X the will the footprint. just, 'XX, close. rightsize continuation

'XX mentioned is standpoint times, the that a that backlog, as are the yet. a little margins we've bit So the couple unpriced of well closed a as from factories muted aren't of as fact why,

be when XXXX, view a position about we'll to talk do of weeks our of couple we a in in actually. Day Investor So

next And with coming our Pavel question James? Molchanov Raymond

about particularly thinking you're market? talk Can of sales the and you mix what seeing year this you're in XXXX, of European geographic what

a from 'XX, -- I is North if we would amount our business, add water our and in in. Tom, matter than start stronger has can backs our have We say and that the I meter revenue strength in for much given continues Yes. of to business. the then America. is Networks Devices be of expected heavily in our Outcomes want and majority that business North water, of to that Europe do the on really -- you good America, vast Devices and was primarily modules revenue communication

of we're So water now. good in right lot strength Europe a seeing

is Joan's in the add the quarter we push almost specifically on bit was with cycle, But watch and to good a signals, shorter continue in government, And that's agree business, year. we'll one watch the stronger meaning I little pretty and Europe comment that coming through market portion will XXXX. market, that had we've the the robust fully XXXX than that's And expected Joan turns around a and seen throughout water Western year, be and to fast-forward into there, continue a helping one it within more business certainly part if water we overall. is that of market I just to commentary, book ship of that local right, tends there the the is

kind I different And it. my slightly M&A cash of around flow. Got question since would the I frame answered, was free already thought

you is debt are that cash only years sheet on. a the and convert You X on the building balance have

So ranking in on what's how you're priority kind of the about cash increase balance? thinking that

the We've is very That priority. active. M&A. been

We continue very to given is. and about be our need on feel right where our our be in position cash balance active, given more we take the actually to good debt, if ability, leverage now, for our acquisition

enhances to far, priority by our that Outcome is is, the #X find something segment. that So

from the line our of with next Research. And coming Seaport Scott Graham question

are probably I When even indexing? hope around price complicating get I -- reprice, hope cost get because price and after you cost, you your to quarter. and that you on threw want overly you that does will that this question. inflation can to still you not I'm that be. call the does it, Congratulations It's -- however price word index, you negative, you Tom, neutrality? answer I Or

the on that time depends it you're about. frame talking Well,

much market really price compared that dealing And an a a the you're to fine That's what to metric between internal visible, trackable very go-forward PPI index, or could on it with. the to you that specific your CPI a and then on you basis. productivity just to to use could very very pricing be on overall make it, point index it So customer something clear. put like will for depend -- to

win you metric. is against whether on So productivity price how a tends generally, in to sense your work. particular that on cost it's that And indexing go-forward depends

it. started are, put to clarity behind if know then a time basis. you index that I behind where you helps relative you or hope that started So ahead, you evolution on

to on little a have again that probably transcript bit. read for it I'll answer, does one help your the but

quarter, So that a big to would guess for get I be of gross bit number's just jump the follow-up same we cost was sake. assume margin kind my to or little fourth differently question that question , in asked price The closer parity. of let's

all And it that mix? enriched them. volume? to like So X, then can Was was yes that maybe but rank Was productivity? you say

and was I I say, biggest. say would yes. all to yes X, mix the would I say probably would

on. Right

does 'XX how margin? then for gross And that look

Well, better year is is provided, gross the think that full margin bit full the I we than in I year commented a guidance assumption earlier, the little 'XX.

this primarily 'XX than annual aggregate, is not XX% margin was part backlog that -- think gross higher 'XX slightly so we in And But networks. of of nonindexed the it in that headwind coming affects QX. in and will overall be the

Joan, in that headwind And Yes. 'XX? -- Yes. I significantly reduces is that assume headwind

the in protected, of X into of or that that to benefit 'XX. the the would going price as of have -- backlog margin you the not so But majority yes, well. Plus expect correct. we Yes, the factories XX% will offline, which is help come the

from Austin question Moeller And coming Canaccord. our with next

Nice quarter.

Where sales interest question recovery, here. X-part as decline, do the right view the with interest And of you the cycle yourself a now? given rates? utilities have demand expect do I So in rates utilities just you sensitivity to further

one. So I take that can

may How edge utilities the and I more figure supply how think that we on distributed real hands They they've problems where generally got got you, more demands. network. in on the pressures and do of make energy it with be, on droughts, resilient and consumer do they've floods more and to They've more balance you are got what have at ice generation side with to solve got out intelligence. that? rising They've that depending demand fires renewables the their Grid resources do see infrastructure storms country today. environmental looking and Edge they the with and storms the to to or or their

customers drive see in Consumers the towards model they new than how that at much those are actively the the we allowed. our new Those detail questions. pressures are looking technology technology. understand customers want address to to traditional finer buying utility service,

been from customers picture pretty steady demand the couple years. behavior at seen rising haven't with our these and has the over technologies. buying We strong, last interest shifts been rates in new looking of has Indeed,

they're return Rate and cases the rate steady. also process getting through regulatory are the working that pretty being is on approved. cases those They're

do as stable rates interest demand As rates, . and the independent of out. come to how demand down, we continue rate maybe cases tell goes up, little or strong a will change to that expect bit plays be time interest the perhaps But to environment

now Thomas I to Mr. the remarks. And over any closing turn for Deitrich back will call

event you today. joining at for updating for investor next March Thank everyone to We look everyone forward joining. time. and thank until our I

Ladies Thank for and gentlemen, that does conclude today. for your the conference you participation.

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