Slide 1: Fourth Quarter 2022 Earnings Conference Call
Tom Deitrich – President and Chief Executive Officer Joan Hooper – Senior Vice President and Chief Financial Officer David Means – Director, Investor Relations Fourth Quarter 2022 Earnings Conference Call February 27, 2023 ©2023 ITRON PROPRIETARY ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference C
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain matters in this presentation and being discussed today, that are not statements of historical fact, constitute forward-looking statements relating to current or future financial performance, management's plans and objectives for future operations, product plans and
Slide 3: Conference Call Agenda
CONFERENCE CALL AGENDA » CEO – Business and Operations Update » CFO – Financial Results and 2023 Guidance » Q&A
Slide 4: Q4'22 and FY'22 Performance Summary
Q4’22 AND FY’22 PERFORMANCE SUMMARY » Revenue in Q4’22 of $467 million and FY’22 of $1.8 billion » Adjusted EBITDA in Q4’22 of $34 million and FY’22 of $95 million » Non-GAAP diluted EPS in Q4’22 of $0.71 and FY’22 of $1.13 ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 4
Slide 5: Bookings and Backlog
BOOKINGS AND BACKLOG » Q4’22 bookings of $898M $4.2 $4.6 $4.0 $4.1 $3.9 » FY’22 bookings of $2.5B » Book to bill of 1.9 in Q4 and 1.4 for FY’22 $2.1 $1.6 $1.7 $1.6 $1.5 » Record: Ending backlog of $4.6B Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 12-Month Backlog Total Backlog Note: Chart in US$ billions, the rev
Slide 6: Operational Insights
OPERATIONAL INSIGHTS » Strong market demand continues » Current supply environment remains volatile » Recovery of supply progressing » Continuing to manage price/cost » A restructuring plan to improve operational efficiency and reduce costs ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call |
Slide 7: Consolidated GAAP Results: Q4'22
CONSOLIDATED GAAP RESULTS: Q4’22 $ in millions (except per share amounts) Q4 2022 Q4 2021 Change Revenue $467.5 $485.6 -4% Change in constant currency flat Gross margin 30.1% 25.0% 510 bps Operating income (loss) $12.4 ($107.5) NM Net income (loss) attributable to Itron, Inc. $22.2 ($58.9) NM Earnin
Slide 8: Consolidated Non-GAAP & Cash Results: Q4'22
CONSOLIDATED NON-GAAP & CASH RESULTS: Q4’22 $ in millions (except per share amounts) Q4 2022 Q4 2021 Change Non-GAAP operating income (loss) $25.3 ($6.6) 484% Non-GAAP operating margin 5.4% (1.4%) 680 bps Non-GAAP net income attributable to Itron, Inc. $32.2 $34.1 -6% Adjusted EBITDA $34.4 $3.2 NM A
Slide 9: Revenue Year-Over-Year Bridge: Q4'22
REVENUE YEAR-OVER-YEAR BRIDGE: Q4’22 -27% +15% +7% flat Chart in millions, Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart includes rounding. ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 9
Slide 10: Non-GAAP EPS Year-Over-Year Bridge: Q4'22
NON-GAAP EPS YEAR-OVER-YEAR BRIDGE: Q4’22 US$ per share Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart includes rounding. ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 10
Slide 11: Device Solutions Segment: Q4'22
DEVICE SOLUTIONS SEGMENT: Q4’22 Revenue, gross margin and operating margin $ in millions, actual currency Revenue down 36% and 27% in constant currency $157 » Sale of C&I gas business » Continued product pruning $100 Gross margin up 230 bps 11.3% » Improving mix with discontinued lines of business 9
Slide 12: Networked Solutions Segment: Q4'22
NETWORKED SOLUTIONS SEGMENT: Q4’22 Revenue, gross margin and operating margin $ in millions, actual currency Revenue up 14% and 15% in constant currency $301 » Ramp of new and existing deployments $265 30.2% 32.8% Gross margin up 260 bps » Favorable mix » Partially offset by elevated component costs
Slide 13: Outcomes Segment: Q4'22
OUTCOMES SEGMENT: Q4’22 Revenue, gross margin and operating margin $ in millions, actual currency Revenue up 4% and 7% in constant currency $66 » Higher software license and product sales $64 » Partially offset by decline in EMEA prepay business 46.5% 42.6% Gross margin up 390 bps » Favorable mix »
Slide 14: Full Year 2022 Summary
FULL YEAR 2022 SUMMARY Revenue Year-Over-Year Bridge1 (in constant currency) » Revenue of $1.8B down 9% from 2021 » Down 6% in constant currency » Down 2% adjusted for the sale of the C&I gas business and foreign exchange rates » Gross margin of 29.1% » Adj EBITDA of $95M Non-GAAP EPS Year-Over-Year
Slide 15: Debt and Liquidity Overview: December 31, 2022
DEBT AND LIQUIDITY OVERVIEW: DECEMBER 31, 2022 US$M Debt $460 » Net leverage 2.7x at end of Q4’22 » Zero interest convertible notes $258 Free Cash Flow and Liquidity » FY Free cash flow of $5M » Cash and equivalents of $202M » $500M revolver 1 Total Debt Net Debt 1. Excludes amortization of debt fee
Slide 16: 2023 Guidance
2023 GUIDANCE Revenue of $1.85 - $1.95 billion » ~6% growth at the midpoint Non-GAAP diluted EPS of $0.70 - $1.10 » ~6% growth at the midpoint (normalized @ 28% tax rate for both years) Assumptions: o Euro/USD of $1.05 o Effective non-GAAP tax rate of ~28% o Average diluted shares outstanding of ~45
Slide 17: Q1'23 Outlook
Q1’23 OUTLOOK Revenue of $460 - $475 million Non-GAAP diluted EPS of $0.05 - $0.15 o Includes one-time $2M tax adjustment which drives the effective non-GAAP tax rate to a range of ~40 - 60% ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 17
Slide 18: Restructuring Plan
RESTRUCTURING PLAN » Rationale: Continuing to execute our asset light strategy with improved operational efficiency and reduced operating costs » Annualized Savings: ~$14-17M USD, Savings complete early 2025 » Anticipated Cash Cost: ~$40-45M USD, Cash-out primarily 2024-2026 » Timeline: Begin immedi
Slide 19: Appendix
APPENDIX
Slide 20: Consolidated GAAP Results: FY'22
CONSOLIDATED GAAP RESULTS: FY’22 $ in millions (except per share amounts) FY 2022 FY 2021 Change Revenue $1,795.6 $1,981.6 -9% Change in constant currency -6% Gross margin 29.1% 28.9% 20 bps Operating loss ($7.4) ($79.3) NM Net loss attributable to Itron, Inc. ($9.7) ($81.3) NM Loss per share ($0.22
Slide 21: Consolidated Non-GAAP & Cash Results: FY'22
CONSOLIDATED NON-GAAP & CASH RESULTS: FY’22 $ in millions (except per share amounts) FY 2022 FY 2021 Change Non-GAAP operating income $58.4 $75.6 -23% Non-GAAP operating margin 3.3% 3.8% -50 bps Adjusted EBITDA $95.1 $115.2 -17% Adjusted EBITDA margin 5.3% 5.8% -50 bps Non-GAAP net income attributab
Slide 22: Revenue Year-Over-Year Bridge: FY'22
REVENUE YEAR-OVER-YEAR BRIDGE: FY’22 -23% +3% flat -6% Chart in millions. Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart includes rounding. ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 22
Slide 23: Non-GAAP EPS Year-Over-Year Bridge: FY'22
NON-GAAP EPS YEAR-OVER-YEAR BRIDGE: FY’22 US$ per share Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart includes rounding. ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 23
Slide 24: Device Solutions Segment: FY'22
DEVICE SOLUTIONS SEGMENT: FY’22 Revenue, gross margin and operating margin $ in millions, actual currency Revenue down 32% and 23% in constant currency $645 » Sale of C&I gas business and other product pruning » Foreign exchange rates $439 » Constrained revenue due to component shortages 15.4% 14.1%
Slide 25: Networked Solutions Segment: FY'22
NETWORKED SOLUTIONS SEGMENT: FY’22 Revenue, gross margin and operating margin $ in millions, actual currency Revenue up 2% and 3% in constant currency $1,093 $1,119 » Ramp of new and existing deployments » Partially offset by constrained revenue due to component shortages 34.7% 32.3% Gross margin do
Slide 26: Outcomes Segment: FY'22
OUTCOMES SEGMENT: FY’22 Revenue, gross margin and operating margin $ in millions, actual currency $244 $238 Revenue down 3% and flat in constant currency » Decline in consulting business and EMEA prepay business 39.0% 41.4% » Offset by an increase in Managed Services and Grid Operations Gross margin
Slide 27: FX Impact Summary
FX IMPACT SUMMARY $ in millions Average USD/Euro: Average USD/Euro: $1.02 Q4’22 vs $1.14 Q4’21 $1.05 FY’22 vs $1.18 FY’21 YoY YoY Change YoY YoY Change Revenue Q4'22 Excluding Revenue FY'22 Excluding Change Change FX FX Device Solutions $100 -36.1% -27.0% Device Solutions $439 -32.0% -23.4% Networke
Slide 28: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non- GAAP financial measures, including non-GAAP operating expense, non-GAAP operati
Slide 29: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 29
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 30
Slide 31: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS ©2023 ITRON PROPRIETARY Q4 2022 Earnings Conference Call | 31
Slide 32: Thank You
INVESTOR RELATIONS CONTACTS David Means Director, Investor Relations 737-242-8448 david.means@itron.com Thank You www.itron.com