Itron, Inc.

Good day, everyone, and welcome to the ITON Incorporated Q4 2020 Earnings Conference. Today's call is being recorded. And now for opening remarks and introductions, I'd like to turn the call over to Ken Gianella. Please go ahead. Thank you, Operator.

Good morning and welcome to ITRON's fourth quarter 2020 earnings conference call. We issued a press release earlier today announcing our results. The press release includes replay information about today's call. A presentation to accompany our remarks on this call is also available through the webcast and on our corporate website under the Investor Relations tab. On the call today, we have Tom Deitrich, ITRON's President and Chief Executive Officer, and Joan Hooper, Senior Vice President and Chief Financial Officer. Following our prepared remarks, we will open the call to take questions using the process the operator described. Before I turn the call over to Tom, please let me remind you of our non-GAAP financial presentation and our safe harbor statement. Our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance. Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our investor relations website. We will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from these expectations because of factors that were present in today's earnings release and the comments made during this conference call and in the risk factor section of our Form 10-K and other reports and filings with the Securities and Exchange Commission. In addition, due to the fluid nature of the COVID-19 pandemic, company estimates regarding the impact of COVID-19 on current or forward-looking statements are made in a good faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, February 24th, 2021, may materially change, and we do not undertake any duty to update any of our forward-looking statements. Now, please turn to page four in the presentation, and I'll turn the call over to our CEO, Tom Deitrich. Thank you, Ken.

Good morning, and thank you for joining us. Exiting 2020, ITRON is stronger and focused on the future. Entering 2021, we are cautiously optimistic that the near-term pandemic impacts are beginning to ease and we remain bullish on our trajectory. During the fourth quarter, our team continued to focus on the success of our customers and safely delivered results. With the second waves of COVID-19 gaining access in both our European and North American markets, we saw slower book-and-ship business from our expectations from midsummer. You will hear details from Joan shortly, but to summarize our fourth quarter performance. Revenue was $525 million. Adjusted EBITDA was $56 million. Non-GAAP earnings per share was $0.65. And free cash flow was $29 million. While these results still reflect the ongoing effects of the pandemic, we see an operating outlook that is weighted towards the second half and should improve in 2021 and beyond. To add some color on this, let me give a brief update on the customer and operating environment as we see it today. Beginning with our customers, consistent with the last few quarters, we have not seen contract cancellations and collections have continued as expected. We have strong bookings in Q4 that reflects accelerating interest in our RETA distributed intelligence platform, automation solutions, grid resiliency, and data analytics. We continue to see robust activities from our customers looking to deploy higher value solutions and applications that increase efficiency and insight into their operations. Turning to slide five, for the year, we achieved a book-to-bill ratio of over one-to-one driven by bookings in the fourth quarter of approximately $973 million, giving us a record total backlog of approximately $3.3 billion. and a 12-month backlog at approximately $1.2 billion. I would highlight that the $1.2 billion 12-month backlog this quarter is approximately $100 million more than the prior quarter. However, it is still approximately $300 million less than the view we had pre-pandemic entering 2020. This data aligns with our prior commentary. The desire for our solutions is increasing and our customers' intent to deploy at rate is improving. But it is also clear some of the pandemic constraints are still present. We continue to see only a modest recovery and deployment pace in 2021 with more projects poised to ramp in the years ahead. Strategically, despite these near-term crosswinds, we have made solid progress on our company priorities that we laid out a year ago. During Q4, the cumulative number of distributed intelligence-capable endpoints exceeded 2.7 million as we expanded our footprint with over 24 customers actively deploying our flexible and agile platform with dozens more in the pipeline. By deploying our advanced network, it enhances our ability to expand our value with our outcomes segment. In 2020, we increased our endpoints under management to over 74 million. Thank you. Thank you. We have assembled an ecosystem of hundreds of global partners to expand our reach and assist in deploying more advanced applications efficiently and effectively on our secure, multipurpose, multitenant network. To highlight two examples of our partners' progress in 2020, U.S. Cubed was awarded the IoT Evolution Product of the Year for their wastewater detection and management solution, seamlessly adding capability to our water endpoints. Another example of our partners in action is New Cosmos. Their methane detection sensors are being deployed on our existing network infrastructure and have deftly sidestepped hundreds of potential safety incidents across gas deployments. Notably, some of our most forward-thinking investments in 2020 included expanding the offerings on our distributed intelligence platform with several new technology partners that are building a pipeline of new applications, We are onboarding in 2021 and beyond. As the leader in distributed intelligence for critical infrastructure, our platform, including edge computing, downloadable applications, application orchestration and management provides both our customers and partners flexibility that can be deployed today with a path for tomorrow as their needs and wants change over time. Many of our partners see distributed intelligence as a means of augmenting existing solutions, like volt-bar optimization, increased flexibility in thin-client prepaid offerings, and rapid integration of renewables and distributed energy resources into the grid. Others see it as an opportunity to replace their existing hardware-based solutions or improve capabilities such as load disaggregation and consumer engagement that can be used to detect anomalies in behavior for seniors living on their own. The most exciting prospect of our DI technology is that we future-proof our customers by enabling them to download and enable support for new use cases at a pace not previously seen in our industry. These greenfield opportunities to create new use cases for utility customers are coming from partners that include large system integrators, and many more. These are just a few examples of the progress and innovation that we have made possible during this past year and why we remain positive that our efforts will continue to create value for our stakeholders in 2021 and beyond. With that, let me hand off to Joan to discuss our fourth quarter earnings results.