Itron(ITRI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter revenue was $613 million, a 6$58 million or $1.26 per diluted share, compared to$44 million or $0.96 per diluted share in the prior year [17] - Non-GAAP net income for the quarter was$62 million or $1.35 per diluted share, versus$1.23 a year ago, with free cash flow of $70 million compared to$39 million a year ago [19][17] Business Line Data and Key Metrics Changes - Device solutions revenue decreased 5% on a constant currency basis, primarily due to a decline in legacy electric meter sales [20] - Network solutions revenue grew 6% year over year, driven by increased new project deployments and strong operational execution [20] - Outcomes revenue grew 25% year over year, primarily due to increased software licenses and services, with a record revenue of $91 million and a gross margin of 44$2.7 billion, contributing to a record year-end backlog of $4.7 billion, with a book-to-bill ratio of 1.11$2.4 billion to $2.5 billion, indicating flat year-over-year growth, but approximately 6$1.265 billion, with net debt at $214 million and cash and equivalents at$1.05 billion as of December 31 [28] - The company achieved a record free cash flow of $208 million or 9$98 million or 5% in the prior year [27] Q&A Session Summary Question: Insights on cash generation and M&A pipeline - Management expects continued improvement in free cash flow conversion from 2024 to 2025, with a target of 10% to 12% of revenue for free cash flow [40] - The company is actively looking at various M&A targets, focusing on outcomes and grid intelligence areas [43] Question: Demand environment and outcomes growth - The outcomes business is expected to be the fastest-growing segment for 2024 to 2025, with significant potential for recurring revenue growth [47][51] Question: Regional demand and regulatory environment - North America leads in opportunities, with strong demand in Asia Pacific, while Europe is approached with caution due to market conditions [58][60] Question: Competitive environment and applications - The company maintains a substantial lead in grid edge intelligence, with a focus on innovation and customer support [62] Question: 2025 bookings and revenue recognition - Bookings are expected to be lumpy, with a one-to-one book-to-bill ratio anticipated for the year [70][115] Question: Impact of tariffs and supply chain - The company is monitoring potential tariffs on components from Mexico, with a focus on maintaining supply chain flexibility [72][144] Question: Partnerships and project updates - Partnerships with companies like GE Vernova and ABB are in pilot stages, with strong customer interest but not yet generating revenue [90] Question: Outcomes margins and variability - Outcomes gross margins are expected to improve year over year, but variability is anticipated due to the subscale nature of the business [85]