Itron, Inc.

Good day and welcome to the ITRON Incorporated Quarter 3 2022 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to the Vice President, Investor Relations, Kenneth Janela. Please go ahead, sir.

Thank you, Operator. Good morning and welcome to ITRON's third quarter 2022 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 Dietrich, 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'll 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 presented in today's earnings release, in 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. All company comments, estimates, 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, November 3, 2022, 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 Dietrich.

Thank you, Ken. Good morning, and thank you for joining us. You will hear third quarter details from Joan coming up shortly, but here's a brief overview of the quarter. Revenue was $421 million. Adjusted EBITDA was $24 million. Non-GAAP earnings per share was 23 cents, and free cash flow was $11 million. Turning to slide five, despite some ongoing macroeconomic crosswinds, we continue to see strong market demand for our technology. This is reflected in our third quarter bookings of $578 million and our total backlog reaching another new record of $4.2 billion. We anticipate the demand for our technology to remain robust as our customers require more insight and control over their energy and water assets. This was extremely evident through the discussions we had with our customers, partners, and suppliers in our ITRON Inspire Conference in September. The alignment of our offerings with the needs of our customers has never been stronger, driven by the proliferation of electric vehicles, the need for distributed energy resource management, and the utilities' desire to actively engage with their consumers. Some of our key bookings this quarter highlight how ITRON enables the integration of renewable and distributed energy technologies onto the grid with our optimizer distributed energy management solution, our customers' PEPCO holdings, and Tampa Electric Company chose our optimizer solution to allow them to analyze and control their distributed energy resources more efficiently. Next, we're proud to announce Electro Utilities Corporation as one of our newest logos. Already a leader in utility innovation in Canada, we were selected for their next-generation technology refresh, including leveraging our Gen 5 Riva network and distributed intelligence-enabled endpoints to enhance the visibility and control at the edge of their distribution grid. Now turning to slide six, I would like to provide some operational updates and insights for the quarter. We see robust market demand with a pipeline that remains plentiful and a regulatory environment that continues at a healthy pace. While the market environment is positive and our backlog is resilient in a case of possible macroeconomic slowdown, We continue to experience macro supply chain constraints, slowing our ability to convert backlog into revenue. These global constraints remain focused in analog, RF, and mixed signal semiconductors that are commonly used in the automotive industry and other industrial applications. Unexpected shortages, inbound shipment delays, and nonlinear deliveries of critical components within the quarter hampered our visibility and created inefficiencies within our factories, resulting in quarterly revenue constraints above our expectations. We remain in an inflationary environment, which was partially offset by pricing actions. While the cost plateaued during the quarter, we recognize volatility may still carry forward. These headwinds have directly impacted the performance of the company, particularly in the network solution segment during recent quarters. Indirectly, the near-term growth of our outcomes segment has been deferred as well. While outcomes growth remains at the forefront of our strategic direction, the supply constraints have driven delays of new projects, particularly those involving our distributed intelligence solutions, managed services, software, and value-added applications impacting our near-term growth trajectory. As supply stabilizes and our project deployment schedules resume at pace, we are confident the outcomes business will get back on track. While these headwinds are disappointing, we do not sit idle and continue to proactively work through this difficult macro situation, including taking on more inventory for improved backlog conversion, maintaining controls over discretionary spend, finding new ways to be more innovative and agile in the introduction of new products to the market, improving our operational footprint, with our asset-light strategy and, of course, maintaining close engagement with our customers to plan the delayed deployments. We do anticipate improvement in these macro-driven headwinds moving forward, allowing us to get back on track. Looking out beyond the current situation, we remain constructive on the long-term secular tailwinds combined with our market and technology advantage that will allow us to enhance our performance. I will now hand off to Joan to cover our third quarter results in more detail and an update on our fourth quarter outlook.