Q1 2024 Itron Inc Earnings Call

Yeah.

Okay.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to ITRON's first quarter 2024 earnings release conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day, ladies and gentlemen, thank you for standing by welcome I trials first quarter 'twenty 'twenty four earnings release conference call.

Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising where your hand is placed.

Speaker Change: At this time, all participants on a listen only mode.

After the speaker's presentation, there will be a question and answer session.

Speaker Change: Ask a question during the session you will need to buy star one one on your telephone you will then hear an automotive message and Baidu.

Operator: Please note that the news conference is being recorded. I will now hand the conference over to your speaker host, Sir Paul Vincent, Vice President for Investigation. Please go ahead, sir.

Speaker Change: Please note that today's conference is being recorded I will now.

Speaker Change: And the conference Oh, excuse me go house support.

Vinson: Vinson Vice myself Investor Relations. Please go ahead Sir.

Vinson Vice: Good morning, and.

Paul Vincent: Good morning, and welcome to ITRON's first quarter 2024 Earnings Competition. Tom Dietrich, ITRON's President and Chief Executive Officer, and Joan Hooper, Senior Vice President and Chief Financial Officer, will review ITRON's first quarter results and provide a general business update.

Vinson Vice: And welcome to <unk> first quarter 2024 earnings conference call.

Vinson Vice: Tom Deitrich, <unk>, President and Chief Executive Officer and.

Vinson: Joan Hooper Senior Vice President and Chief Financial Officer will review <unk> first quarter results and provide a general business update and outlook.

Paul Vincent: Earlier today, the company issued a press release announcing its results. This release also includes details related to the conference call and webcast replay information. Accompanying today's call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab. Following prepared remarks, the call will open for questions using the process the operator described. Before Tom begins, a reminder that 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.

Vinson: Earlier today, the company issued a press release announcing its results.

Vinson: This release also includes details related to the conference call and webcast replay information.

Vinson: Accompanying today's call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab.

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

Speaker Change: Before Tom begins.

Speaker Change: Mind, you that our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance.

Speaker Change: Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website.

Paul Vincent: 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 uncertainty. Actual results could differ materially from these expectations because of factors that were presented in today's earnings release and comments made during this conference, as well as those presented in the Risk Factors 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 good faith.

Vinson: We will be making statements. During this call that are forward looking.

Vinson: These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Vinson: Actual results could differ materially from these expectations because of factors that were presented in today's earnings release and comments made during this conference call as well as those presented in the risk factors section of our Form 10-K, and other reports and filings with the Securities and Exchange Commission.

Vinson: 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 May <unk> 2024 may materially change and we do not undertake any duty to update any of our forward looking statements.

Paul Vincent: It doesn't provide appropriate insight into our current and future operating and financial environment. Materials discussed today, May 2nd, 2024, may materially change, and we do not undertake any duty to update any of our forward-looking statements. Now please turn to page 4 of our presentation as our CEO, Tom Deitrich, begins his remarks. Thank you, Paul.

Vinson: Now please turn to page four of our presentation as our CEO, Tom Dietrich begins his remarks.

Thomas L. Deitrich: Good morning to everyone, and thank you for joining our call. Operational execution and market conditions improved for the sixth consecutive quarter, and our entire value chain from component supply to field installation performed better than anticipated, which increased our top and bottom line results. Market interest and adoption of our grid edge intelligence platform continue to grow, and our pipeline of opportunities is expanding as our customers accelerate their adoption of new digital technology and non-wired grid solutions.

Thomas L. Deitrich: Thank you Paul good morning to everyone and thank you for joining our call.

Thomas L. Deitrich: Operational execution and market conditions improved for the sixth consecutive quarter and our entire value chain from component supply to field installation performed better than anticipated, which increased our top and bottom line results.

Thomas L. Deitrich: Market interest and adoption of our grid edge intelligence platform continues to grow and our pipeline of opportunities is expanding as our customers accelerate their adoption of new digital technology and non wires grid solutions.

Thomas L. Deitrich: In addition to organic growth through innovation, M&A is a key strategic initiative of ours, and during the quarter, we acquired Elpis Square. We now have added real-time power flow analysis and grid planning capabilities to our offerings, furthering our capacity to scale the outcomes segment more rapidly in the years ahead. Now looking at slide five, financial highlights for the first quarter include: Year-over-year revenue grew 22% to $603 million, adjusted EBITDA of $76 million, an increase of 94% year-over-year, non-GAAP earnings per share of $1.24, an increase of 153%, and free cash flow of $34 million, an increase of approximately $40 million year over year. Turning to slide six, the backlog at the end of the Bookings for the first quarter of $361 million reflect normal seasonality and the timing of new bookings.

Thomas L. Deitrich: In addition to organic growth through innovation M&A is a key strategic initiative with ours and during the quarter, we acquired Opus squared.

Thomas L. Deitrich: We now have added real time power flow analysis, and grid planning capabilities to our offerings furthering our capacity to scale the outcomes segment more rapidly in the years ahead.

Thomas L. Deitrich: Now looking at slide five financial highlights for the first quarter include.

Thomas L. Deitrich: Year over year revenue grew 22% to $603 million adjusted EBITDA of $76 million, an increase of 94% year over year non-GAAP earnings per share of $1.24 an increase of 153%.

Thomas L. Deitrich: And free cash flow of $34 million, an increase of approximately $40 million year over year.

Thomas L. Deitrich: We maintain our four-year outlook for a book-to-bill ratio of one-to-one or greater. Across our customer base, engagement related to Itron's grid edge intelligence platform continues to grow due to a variety of factors, including data center related demand growth, reindustrialization and production localization, and electrification of transportation and the home. Water Scarcity and the Automation of Water Infrastructure, Safety Applications for Gas Customers, and the Digitalization of Their Operations

Thomas L. Deitrich: Turning to slide six the backlog at the end of the first quarter was $4 3 billion.

Thomas L. Deitrich: Bookings for the first quarter of $361 million reflects normal seasonality and the timing of new bookings, we maintained our full year outlook for a book to bill ratio of one to one or greater.

Thomas L. Deitrich: Across our customer base engagement it related to <unk> grid edge intelligence platform continues to grow due to a variety of factors, including.

Thomas L. Deitrich: Data center related demand growth Reindustrialization in production localization and in electrification of transportation in the hole.

Thomas L. Deitrich: Water scarcity and the automation of water infrastructure safety applications for gas customers and the digitalization of their operations.

Thomas L. Deitrich: Notable backlog added during the quarter includes Oklahoma Gas and Electric, which renewed their longstanding partnership with Itron. This agreement consolidates a comprehensive range of hardware, software, and services across OG&E's territory and enables the adoption of new technology as their needs evolve. Also during the quarter, the City of Fort Collins selected Itron to provide a distributed energy resource management solution to manage demand response, energy efficiency, and customer engagement programs. Itron's software solution provides a single enterprise platform to support control strategies for a range of use cases, including EV charging and battery management.

Thomas L. Deitrich: Notable backlog added during the quarter includes Oklahoma gas and electric renewed their long standing partnership with iPhone disagreement consolidates, a comprehensive range of hardware software and services across <unk> territory and enables the adoption of new technology as their needs evolve.

Thomas L. Deitrich: Also during the quarter the city of Fort Collins selected <unk> to provide a distributed energy resource management solution to manage demand response energy efficiency and customer engagement programs.

Thomas L. Deitrich: <unk> software solution provides a single enterprise platform to support control strategies for a range of use cases, including EV charging and battery management.

Joan S. Hooper: Now Joan will provide details about our first quarter and our outlook for the second quarter. Thank you, Tom. Please turn to slide seven for a summary of consolidated gap results. First quarter revenue of $603 million increased 22% year over year and was our highest level since the fourth quarter of 2019. The growth was driven by conversion of previously constrained revenue and continued customer demand.

Thomas L. Deitrich: Now John will provide details about our first quarter and our outlook for the second quarter.

John: Thank you Tom Please turn to slide seven for a summary of consolidated GAAP results.

John: First quarter revenue of 603 million increased 22% year over year.

John: It was our highest level since the fourth quarter of 2019.

John: The growth was driven by conversion of previously constrained revenue and continued customer demand.

Joan S. Hooper: You may recall we entered 2024 with approximately 125 million of previously constrained revenue. More than half of this was fulfilled in the first quarter, which resulted in higher than expected revenue, and a gross margin of 34%, 240 basis points higher than last year, primarily due to favorable product mix and operational efficiency. Gap net income of $52 million, or $1.12 per diluted share, compares to a loss of $12 million, or $0.26 per share, in the prior year.

John: You May recall, we entered 2024 with approximately $125 million of previously constrained revenue.

John: And then half of this was fulfilled in the first quarter, which resulted in higher than expected revenue.

John: Gross margin of 34% with 240 basis points higher than last year, primarily due to favorable product mix and operational efficiencies.

Joan S. Hooper: The improvement was driven by higher operating income due in part to a restructuring charge booked in the prior year. Regarding non-GAAP metrics on slide eight, non-GAAP operating income of $67 million increased 115% year over year. Adjusted EBIT of $76 million nearly doubled from the prior year. Non-GAAP net income for the quarter was $57 million or $1.24 per diluted share versus $0.49 a year ago.

Thomas L. Deitrich: GAAP net income of 52 million or $1 12 per diluted share compares to a loss of 12 million or <unk> 26 per share in the prior year. The improvement was driven by higher operating income due in part to a restructuring charge booked in the prior year.

Thomas L. Deitrich: Regarding non-GAAP metrics on slide eight non-GAAP operating income of $67 million increased to 115% year over year.

Thomas L. Deitrich: Adjusted EBIT of 76 million nearly doubled from the prior year.

Thomas L. Deitrich: non-GAAP net income for the quarter was $57 million or $1 24 per diluted share versus <unk> 49, a year ago. This quarter was a record high for non-GAAP earnings per share.

Joan S. Hooper: This quarter was a record high for non-GAAP earnings per share. Pre-cash flow was $34 million in Q1 versus negative $5 million a year ago. The improvement reflects significant year-over-year earnings growth. Year-over-year revenue comparisons by business segment are on slide nine. Device Solutions revenue of $127 million increased $7 million, or 6% on a constant currency basis, driven by growth in water meter and communication module sales in the EMEA region.

Thomas L. Deitrich: Free cash flow was $34 million in Q1 versus negative $5 million a year ago, the improvement reflect significant year over year earnings growth.

Thomas L. Deitrich: Year over year revenue comparisons by business segment on slide nine.

Thomas L. Deitrich: Device solutions revenue of $127 million increased $7 million or 6% on a constant currency basis, driven by growth in water meter and communication module sales in the EMEA region.

Joan S. Hooper: Network Solutions revenue of $408 million, a new quarterly record, increased 30% year over year. Revenue growth was driven by improved component availability, operational efficiencies, and project scheduling alignment. Outcomes revenue of $69 million increased 10% year over year, primarily due to an increase in recurring revenue. Moving to the non-GAAP year-over-year EPS bridge on slide 10. Our Q1 non-GAAP EPS increased $0.75 per share year-over-year to $1.24 per diluted share.

Thomas L. Deitrich: Network solutions revenue of $408 million, a new quarterly record increased 30% year over year.

Thomas L. Deitrich: Revenue growth was driven by improved component availability operational efficiencies and project scheduled in alignment.

Thomas L. Deitrich: Outcomes revenue of $69 million increased 10% year over year, primarily due to an increase in recurring revenue.

Thomas L. Deitrich: Moving to the non-GAAP year over year EPS Bridge on Slide 10, our Q1, non-GAAP EPS increased 75 per share year over year to $1 24 per diluted share.

Joan S. Hooper: Pre-tax operating performance contributed $0.88 per year of year-over-year improvement driven by the fall through of higher revenue and gross profit partially offset by higher operating expenses. Higher tax expense had a negative year-over-year impact of $0.11 per share, and FX and share count had a negative $0.02 per share impact. Turning to slides 11 through 13, I will cover Q1 segment results compared with the prior year. Device Solutions' revenue was $127 million; gross margin was 23.7%, and operating margin was 17.1%.

Thomas L. Deitrich: Pre tax operating performance contributed <unk> 88 per share year over year improvement driven by the fall through of higher revenue and gross profit, partially offset by higher operating expenses.

Thomas L. Deitrich: Higher tax expense had a negative year over year impact of <unk> 11 per share and FX and share count had a negative <unk> <unk> per share impact.

Joan S. Hooper: Gross margin was up 360 basis points year over year, and operating margin was up 520 basis points, reflecting a higher value product mix and operational efficiency. Network Solutions revenue was 408 million with gross margin of 37.1% and operating margin of 28.6%; gross margin increased 340 basis points year over year, and operating margin was up 470 basis points due to favorable product mix and volume-related deficiencies. Outcomes revenue was $69 million, with a gross margin of 35.1% and an operating margin of 13.1%. Gross margin decreased 760 basis points year-over-year, and operating margin was down 740 basis points due to a lower-margin revenue mix and increased services cost.

Speaker Change: Turning to slides 11 through 13, I'll cover Q1 segment results compared with the prior year.

Thomas L. Deitrich: Device solutions revenue was 127 million gross margin was 23, 7% and operating margin was 17, 1%.

Thomas L. Deitrich: Gross margin was up 360 basis points year over year in operating margin was up 520 basis points, reflecting a higher value product mix and operational efficiencies.

Thomas L. Deitrich: Network solutions revenue was $408 million with gross margin of 37, 1% and operating margin of 28, 6%.

Thomas L. Deitrich: Gross margin increased 340 basis points year over year in operating margin was up 470 basis points due to favorable product mix and volume related efficiencies.

Thomas L. Deitrich: Outcomes revenue was $69 million with gross margin of 35, 1% and operating margin of 13, 1%.

Thomas L. Deitrich: Gross margin decreased 760 basis points year over year, and operating margin was down 740 basis points due to a lower margin revenue mix and increased services costs.

Thomas L. Deitrich: Turning to slide 14, I'll review liquidity and debt at the end of the first quarter. Total debt was $460 million, and net debt was $159 million. Net leverage was 0.6 times at the end of Q1, and cash and equivalents were $301 million. During the first quarter, we acquired Elpis Squared for a cash consideration of approximately $34 million. Now, please turn to slide 15 for our second quarter. We anticipate Q2 revenue to be within a range of $595 to $605 million, an 11% year-over-year increase at the midpoint.

Speaker Change: Turning to slide 14, I'll review liquidity and debt at the end of the first quarter.

Speaker Change: Total debt was $460 million and net debt was $159 million net leverage was 0.6 times at the end of Q1 and cash and equivalents were $301 million.

Speaker Change: During the first quarter, we acquired ultra square for cash consideration of approximately $34 million.

Speaker Change: Now please turn to slide 15 for our second quarter outlook, we anticipate Q2 revenue to be within a range of $595 million to $605 million, an 11% year over year increase at the midpoint.

Thomas L. Deitrich: We expect the remaining approximately 40 million of previously constrained revenue will be delivered in the second quarter. And this is reflected in our, We anticipate second quarter non-gap EPS to be within a range of 90 cents to $1 per diluted share, which at the midpoint is approximately 46% year over year growth. Now I'll turn the call back to Thomas. Thank you, Joan.

Speaker Change: We expect the remaining approximately $40 million of previously constrained revenue will be delivered in the second quarter and this is reflected in our outlook.

Thomas L. Deitrich: We anticipate second quarter non-GAAP EPS to be within a range of 90 to $1 per diluted share, which at the midpoint is approximately 46% year over year growth.

Thomas L. Deitrich: Now I will turn the call back to Tom.

Tom: Thank you Joan.

Thomas L. Deitrich: Our grid edge intelligence platform is at the core of our ability to innovate and continue to offer our customers advanced solutions that address the growing complexity of energy and water management. Two recent milestones signify the scale and breadth of Itron's solutions. The differentiated services we offer through our outcome segment are a competitive advantage, and we are honored to have recently surpassed 100 million endpoints under Itron management, 365 days a year, 24 hours a day.

Tom: Our grid edge intelligence platform is at the core of our ability to innovate and continue to offer our customers advanced solutions that address the growing complexity of energy and water management two recent milestones signify the scale and breadth of <unk> solutions. The differentiated services, we offer through our outcomes segment are a competitive advantage.

Tom: Vantage and we are honored to have recently surpassed 100 million endpoints under <unk> management 365 days per year 24 hours per day. This.

Thomas L. Deitrich: This is possible due to the consistent delivery of reliable, critical infrastructure and the trust that a wide range of customers have given. Additionally, a longstanding customer, Accel Energy, recently deployed its two millionth distributed intelligence endpoint and continues to expand its deployment. These endpoints are critical in Accel's efforts to provide cleaner, safer, and more reliable energy to its customers across eight states.

Tom: This is possible due to the consistent delivery of reliable critical infrastructure and the trust that a wide range of customers have granted.

Tom: Additionally, a longstanding customer excel energy recently deployed it's 2 million distributed intelligence endpoint and continues to expand its deployment. These endpoints are critical and <unk> efforts to provide cleaner safer and more reliable energy to their customers across eight states.

Thomas L. Deitrich: This milestone is an important marker as the nature of what we do requires careful planning and project resilience. Finally, during the quarter, we hosted Investor Day. The presentations include detailed discussions of our great edge intelligence platform, customer testimonials, a comprehensive segment level discussion, new long-term financial targets, and a virtual technology demonstration. I encourage anyone interested in learning more about Itron to visit our website, where these presentations are available for replay. Thank you for joining us today.

Tom: This milestone is an important marker as the nature of what we do requires careful planning and project resiliency.

Tom: Finally during the quarter, we hosted an investor day.

Tom: Presentations include detailed discussions of our grid edge intelligence platform customer testimonials and a comprehensive segment level discussion, new long term financial targets and a virtual technology demonstration I encourage anyone interested in learning more about <unk> to visit our website, where these presentations.

Tom: Available for replay.

Operator: Operator, please open the line for some questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again.

Speaker Change: Thank you for joining us today operator, please open the line for some questions.

Speaker Change: Thank you, ladies and gentlemen to ask a question you will need to press star one on your telephone and wait my name to be announced.

Operator: Please stand by while we compile the Q&A roster, and our first question comes from the line of Noah Kaye with Oppenheimer. Your line is open. Thanks so much.

Speaker Change: So enjoy your questions and please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: And our first question coming from the line of Noah Kaye with Oppenheimer. Your line is open.

Noah Duke Kaye: You know, it's almost implied in the results and, you know, your commentary around catching up on the deferred revenue in 2Q, but, Just as a sanity check, can you talk about the overall health of the supply chain and manufacturing efficiencies of the company at this point? And what, if any, improvements you still are looking for as we move into the back half of the year? Sure, happy to do so.

Noah Duke Kaye: Thanks, so much.

Noah Duke Kaye: It's almost implied in the results in.

Noah Duke Kaye: Your commentary around catching up on the deferred revenue in <unk>, but.

Noah Duke Kaye: Just as I say check can you talk about the overall health of the supply chain and manufacturing.

Noah Duke Kaye: During efficiencies of the company at this point.

Noah Duke Kaye: And what if any improvements you still are looking for as we move into the back half of the year.

Thomas L. Deitrich: The numbers that are in the Q1 results and implied in the outlook for the second quarter had us finishing up that roughly $125 million of deferred backlog that we had coming into the year. So that is what's in the numbers that you've seen. What allowed that catch-up to go a little bit faster than we had originally anticipated in Q1, for example, was better component supply, factories running at a good clip all the way through the process to get logistics work done to ship products and complete field installation, which allows us to recognize revenue. So that entire chain worked better than expected than we thought coming into the year itself. So that was really healthy.

Speaker Change: Sure happy to do so.

Noah Duke Kaye: The numbers that are in the Q1 results and implied in the outlook for the second quarter had us, finishing up that roughly $125 million of deferred.

Noah Duke Kaye: Deferred.

Noah Duke Kaye: <unk>.

Noah Duke Kaye: Coming into the year. So that is what's in the numbers that you've seen.

Noah Duke Kaye: What allowed that catch up to go a little bit faster than we had originally.

Noah Duke Kaye: Anticipated in Q1 for example is better component supply factories running at.

Noah Duke Kaye: A good clip all the way through the process to get logistics work done to ship products and.

Noah Duke Kaye: Complete field installation, which allows us to recognize revenue so that entire chain worked better than expected.

Noah Duke Kaye: Then what we thought coming into the year itself. So that was really healthy we see supply chain.

Thomas L. Deitrich: We see the supply chain as continuing to be healthy. Reliability of inbound components is strong and steady. Lead times are still a little bit longer than pre-pandemic levels, but they are starting to retract slightly in pockets here and there. So we view the overall supply chain all the way out through field installation as healthy and constructive for the business. Very clear and helpful, Tom, thanks. You mentioned data center demand, which is just about the hottest topic on the planet right now, as one of the vectors or the influencing factors around the utility customer base.

Noah Duke Kaye: Is continuing to be healthy reliability of inbound components is strong and steady lead times are still a little bit longer than pre pandemic levels.

Noah Duke Kaye: But starting to retract slightly in pockets here and there. So we view the overall supply chain all the way out through field installation is healthy and constructive for the business.

Speaker Change: Very clear and helpful. Tom Thanks, you.

Speaker Change: You mentioned.

Speaker Change: Data center demand, which is.

Speaker Change: It's about the hottest topic on the planet right now.

Speaker Change: As one of the vectors are.

Thomas L. Deitrich: And certainly, we see that in a lot of the public dialogue that utilities are having right now. Where do you see ITRON within the ecosystem of enabling providers for data centers? You're talking about low growth, but you're talking about low growth in very sort of specific concentrated pockets with very high reliability. Yeah, how does Icon fit in that?

Speaker Change: The influencing factors around the utility customer base and certainly we see that in.

Speaker Change: Lot of the public dialogue, because utilities are having right now.

Speaker Change: What do you see I tron within the ecosystem of enabling providers for data center, and you're talking about low growth, but youre talking about load growth and very sort of specific concentrated pockets with very high reliability demands.

Thomas L. Deitrich: And what kind of conversations and solutions are you discussing with the customer? Sure. So data centers are clearly growing, as you've referenced. Those are enormous loads, and they're sitting in one spot. So from a utility planning perspective, they've got to put a lot of power into that one location. How do you do that?

Speaker Change: How does <unk> fit in that and what kind of conversations and solutions are you discussing with your customers around it.

Speaker Change: Sure. So data center is clearly growing.

Speaker Change: You've referenced.

Speaker Change: That those are enormous loads and they are they're sitting in one spot. So from a utility planning perspective, they've got to put a lot of power into that one location.

Speaker Change: How do you do that you certainly have problems with getting enough generation and transmission in place to be able to do that and in the Meanwhile, as that is still waiting to happen and demand load growth is progressing you've got to find a way to make do with what you have and that's where we come in to ring.

Thomas L. Deitrich: You certainly have problems with getting enough generation and transmission in place to be able to do that. In the meantime, as that is still waiting to happen, and demand load growth is progressing, you've got to find a way to make do with what you have. And that's where we come in to wring out the efficiencies in the distribution channel, in the distribution network rather than work through that. So non-wireless alternatives to balance supply and demand to be able to get better efficiencies out of the distribution network are where we play. Non-wires alternatives are things that happen faster than building a new power plant or even a transmission line.

Speaker Change: The efficiencies in the distribution channel and the <unk>.

Speaker Change: Distribution network, rather too.

Speaker Change: Work through that so non wires alternatives to balance supply and demand to be able to get better efficiencies out of the distribution network is where we play non wires alternatives.

Speaker Change: Are things that happen faster than building, a new power plant or even a transmission line and that nimble nature is really whats, allowing utilities to to deal with increased loads broadly whether it comes from transportation or electrification in the home or massive things like data center it is making the.

Pavel S. Molchanov: And that nimble nature is really what's allowing utilities to deal with increased loads broadly, whether it comes from transportation or electrification in the home or massive things like data centers. It is making the distribution network work better. That efficiency gain is where we've got a big role to play, and we see a lot of traction in customer conversations already today. Thank you. Thank you. And our next question coming from the line-up, Pavel Molchanov with Women's Games Zealand, is open.

Speaker Change: Network work better that efficiency gain is where we've got a big role to play and we see a lot of traction with that.

Speaker Change: With customer conversations already today.

Speaker Change: Okay.

Speaker Change: Excellent. Thank you.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line up April Mark Smith with Raymond James Your line is open.

Thomas L. Deitrich: Thanks for taking the question. Um, let me actually follow up on the data center from earlier. Is this going to show up in outcomes? Or will there be incremental demand in Network as well? It shows up in both of those segments for us.

Speaker Change: Thanks for taking the question.

Speaker Change: Let me actually follow up on on the data center from from earlier.

Mark Smith: Is this going to show up in outcomes or will there be incremental demand in.

Mark Smith: Network as well.

Pavel S. Molchanov: Depending on the individual customer deployment, you've got to create visibility into your distribution network to be able to enable that balancing of supply and demand on a local level. So generally, there's a networking component that goes along with that to get the communications channels in place. And then in order to be able to enact changes in demand response kinds of programs or balance supply and demand or understand what's happening in the distribution grid, that's usually software-oriented, and that accrues to the outcomes business. So it shows up in both of the segments that we've been investing in. And it just plays to the longer-term strategy that we've been working towards. Okay.

Mark Smith: It shows up in both of those segments for us.

Mark Smith: Depending on the individual customer deployment.

Mark Smith: You've got to create visibility into your distribution network to be able to enable.

Speaker Change: That balancing of supply and demand on a local level. So generally theres a networking component that goes along with that to get the communications channels in place and then in order to be able to enact changes in demand response kinds of.

Speaker Change: Hams or balancing supply and demand are understanding what's happening in the distribution grid that's usually.

Speaker Change: Software oriented and that accrues to.

Speaker Change: The outcomes business. So it shows up in both of the segments that we've been investing in it just plays to what the longer term strategy that we've been working towards.

Thomas L. Deitrich: Let me also follow up on outcomes. You know, this quarter specifically, you referenced that networked revenue was at a record. Outcomes were, you know, up year over year, but I'm not quite at record level. Do you see those two line items kind of syncing up in terms of growth directionally, or are they disconnecting in some way? Well, in the networks numbers that we talked about, there clearly was that catch-up phenomenon, which drove the percentage up much faster than what you saw in the outcome segment.

Speaker Change: Okay.

Speaker Change: Let me also follow up on on outcomes. This quarter, specifically you referenced that network.

Speaker Change: Revenue was at a record.

Speaker Change: Outcomes why was up year over year, but.

Speaker Change: Not quite at record levels.

Speaker Change: Do you see those two line items kind of.

Speaker Change: Syncing up in terms of growth directionally or are they disconnecting in some sense.

Pavel S. Molchanov: The outcome segment is generally routable recurring revenue, which just layers in on top of each other. So, longer term, the percentage growth rate of the outcomes business clearly will outstrip networks as we're going through this short-term catch up on revenue from component constraints from years past. Clearly, the network is outgrowing the outcome segment in the near term, but longer term, that obviously more and more accrues to the outcomes business. Okay, makes sense.

Speaker Change: Well in the network's numbers that we talked about there clearly was that catch up phenomenon, which drove the percentage up much faster.

Speaker Change: Then then what you saw in the outcomes segment. The outcomes segment is generally.

Speaker Change: A ratable recurring revenue, which just layers on top of each other so longer term the percentage growth rate of the outcomes business clearly will outstrip networks as we're going through this short term.

Speaker Change: Catch up on revenue from component constraints from years past.

Speaker Change: Network is outgrowing.

Speaker Change: The outcomes segment in the near term, but longer term that obviously more and more accrues to.

Speaker Change: To the outcomes business.

Speaker Change: Okay makes sense. Thank you.

Speaker Change: <unk>.

Jeffrey David Osborne: And our next question comes from the line of Jeff Osborne with TD Cohen. Your line is open. Good morning, Tom.

Speaker Change: Thank you and our next question coming from the line of Jeff Osborne with Cowen Your line is open.

Thomas L. Deitrich: I had a question on the networking side as well, with the Elpis acquisition and then going back to Distributech with the Schneider ADMS integration. Can you just walk us through, as you're adding more software, how that potentially might drive more NIC card sales for the networking piece? Is there a way to frame what those two announcements mean in terms of adding networking intelligence to things like transformer substations and other assets? Sure.

Jeffrey David Osborne: Hey, Good morning, Tom and then a question on the networking side as well with the Opus acquisition, and then going back to distribute tech with the Schneider.

Jeffrey David Osborne: Ams integration can you just walk us through as Youre, adding more software.

Jeffrey David Osborne: Potentially might drive more Nic card sale.

Jeffrey David Osborne: For the networking piece is there a way to frame what those two announcements.

Jeffrey David Osborne: In terms of adding networking intelligence that things like transformer substations and other assets.

Thomas L. Deitrich: It's kind of a similar question to the previous one in terms of how to think about it overall. What our GreenEdge Intelligence Platform does is provide visibility of what's out there in your distribution network. And in order to be able to provide that visibility, you need connectivity to the asset. And, okay, the asset could be an EV charger. It could be a line sensor.

Jeffrey David Osborne: Sure.

Jeffrey David Osborne: It's kind of a similar question to the prior in terms of how to think about it overall.

Thomas L. Deitrich: It could be a house. It could be a smart panel. There are many, many different types of assets that you might want to keep track of and have visibility on. And every time you add that connectivity, that adds to the networking business. When you want to do something with that connectivity, meaning, okay, I want to take action, I want to turn something on or off based on that visibility, that is something that generally goes to the outcomes business.

Jeffrey David Osborne: Our grid edge intelligence platform does is provides visibility of what's out there in your distribution network and in order to be able to provide that visibility you need connectivity to the asset and.

Jeffrey David Osborne: The asset could be.

Jeffrey David Osborne: And EV charger it could be a <unk> sensor it could be.

Jeffrey David Osborne: <unk>.

Jeffrey David Osborne: It could be a smart panel there are many many different types of assets that you might want to add to keep track of and have the visibility on.

Jeffrey David Osborne: And every time, you add that connectivity that accrues to the networking business when you want to do something with that connectivity.

Jeffrey David Osborne: Meaning okay, I want to take action I want to turn something on or off based on that visibility.

Jeffrey David Osborne: That is something that generally accrues to the outcomes business.

Thomas L. Deitrich: So, when we do things like power flow analysis or grid planning so a utility can understand where it is appropriate for them to hook up a distributed energy resource, or allow you to interconnect your rooftop solar, for example, that is a combination of networks and outcomes for our business. But it fits into that entire GreenEdge Intelligence Platform.

Jeffrey David Osborne: So when we do things like power flow analysis or.

Jeffrey David Osborne: Or grid planning, so utility could understand where it is appropriate for them to to hook up a distributed energy resource allow you to interconnect youre rooftop solar for example.

Jeffrey David Osborne: That is a combination of networks and outcomes for our business, but it fits into that entire grid edge intelligence platform.

Jeffrey David Osborne: Got it. That's helpful. And then I've asked you this on prior calls, but everything in the recorded results was phenomenal, other than the bookings number, which you said was in line with expected seasonality. Just getting some investor questions as it relates to the full year visibility. So is there a way you can frame or confirm, I assume you've been technically awarded enough volume to be booked to bill above one for the year, and you're just waiting on regulatory approval? Or are there still some awards that you need to receive notification that you've been technically chosen?

Speaker Change: Got it that's helpful and then.

Speaker Change: And I've asked you this on prior calls but.

Jeffrey David Osborne: Everything on the recorded results were phenomenal other than the bookings number which you said was in line with expected seasonality just getting some investor questions as it relates to the full year visibility.

Jeffrey David Osborne: Is there a way you can frame.

Jeffrey David Osborne: Or confirm I assume you'd been technically awarded.

Jeffrey David Osborne: <unk> volume to be book to Bill above one for the year, you're just waiting on regulatory approval or is there still some awards that you need to receive notification that <unk> been technically chosen.

Thomas L. Deitrich: Yeah, I certainly just frame up one quarter of the booking so that there's no mystery there. It was in the range we were expecting. Q1 is generally seasonally low; no change in the full year outlook based on the Q1 results. A rich pipeline of opportunities for all the reasons we were talking about. In order for us to put something in backlog and declare it a booking, we obviously need the award, we need the signed customer contract, and, of course, regulatory approval.

Speaker Change: Yeah, certainly, yes, just frame up one quarter bookings so.

Jeffrey David Osborne: There's no mystery there.

Jeffrey David Osborne: Was in the range, we were expecting in Q1 is generally seasonally low no change in the full year outlook.

Jeffrey David Osborne: Based on the Q1 results rich pipeline of opportunities for all the reasons, we were talking about.

Jeffrey David Osborne: In order for us to put something into backlog and declared a booking we obviously need the award we need.

Jeffrey David Osborne: Signed customer contract and of course regulatory approval. There is a larger number of deals that are in that governmental and regulatory approval.

Thomas L. Deitrich: There is a larger number of deals that are in the governmental and regulatory approval portion of the process, which is typical. And that still gives us a good view for the year overall, but it's always a bit lumpy.

Jeffrey David Osborne: A portion of the process that is typical and thats, what still gives us a good view for the year overall, but it is always a bit lumpy and indeed, you got kind of a low point in Q1, but we're still feeling that.

Jeffrey David Osborne: And indeed, you got kind of a low point in Q1, but we're still feeling like we're on track for the full year. There are several hundred million dollars of bookings that have passed the award and through that contracting and regulatory governmental approval process. So we're feeling good about that. Excellent. That's all I have.

Jeffrey David Osborne: Like we're on track for the full year.

Jeffrey David Osborne: There are several hundred million dollars.

Jeffrey David Osborne: Bookings that are that are past the award and through that contracting and.

Jeffrey David Osborne: Regulatory and governmental approval process. So we're feeling good about it.

Speaker Change: Excellent that's all I had thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Thomas L. Deitrich: Thank you. One moment for our next question. And our next question coming from the line of Chip Moore with Rod M.K. of Milan is open. Chip Moore, Ilana Saltzman.

Speaker Change: Well Im on for next question.

Speaker Change: And our next question coming from the line of Chip Moore with Rod M. Cam. Your line is now open.

Chip Moore: Your line is open.

Chip Moore: Maybe we can skip this, and, ah, now we have you. Very good. Go for it.

Chip Moore: Maybe skipping.

Chip Moore: Gotcha very good okay apologies.

Joan S. Hooper: OK. Apologies. So, hey, thanks for taking the question. I wanted to ask about the outlook. You know, just looking at Q2 expectations, I think it implies maybe more subdued growth in the back half. Obviously, you'll be lapping some tougher comps, and I assume you'll wait for Q2 to make any updates to the full-year outlook. But any way to think of sort of high-level expectations in the second half based on your current visibility? Yeah, this is Joan.

Chip Moore: Hey, Thanks for taking the question Tom I wanted to ask about the outlook just looking at Q2 expectations I think implies maybe more subdued growth in the back half, obviously, you'll be lapping some tougher comps and I assume you'll wait for Q2 to make any updates to the full year outlook.

Speaker Change: Any way to think sort of high level expectations in the second half based on your current visibility.

Chip Moore: I'll take that one, Chip. I would say, you know, stay tuned for August. At this point, when we started the year and gave the full year guidance, our expectations for the second half, I think are still pretty consistent with that view. We'll see how Q2 goes. And the timing, as Tom mentioned, the bookings can affect quarter to quarter when it comes to rolling off the backlog. But at this point, there really is no change to our expectations for the second half.

Chip Moore: Yes. This is John I'll take that one chip I would say stay tuned for August at this point to when we started the year and gave the full year guidance on our expectations for the second half I think are still pretty consistent with that view, we'll see how Q2 goes in and the timing as Tom mentioned in bookings can can affect quarter to quarter when it when it comes from rolling off backlog, but.

Joan S. Hooper: Understood. Thanks. Thanks, Joan.

Chip Moore: At this point really no change to our expectations to the second half.

Chip Moore: And maybe my follow-up, just just on outcomes in the quarter on the margins, I think you called out, you know, some mix and service costs, but anything there? Is it, you know, sort of a larger software project that didn't didn't materialize or anything like that? Thanks.

Speaker Change: Understood. Thanks, Thanks, Jonathan maybe my follow up just on outcomes in the quarter on the margins I think you called out.

Speaker Change: The mix within service costs, but but anything there or is it sort of.

Speaker Change: Largest software project that didn't materialize or anything like that thanks.

Joan S. Hooper: No, no, as we've talked in the past, outcomes is still really a subscale business for us. So you will get variability from quarter to quarter, depending on the proportion of software licenses that are in that particular quarter. So, as you mentioned, there were a lot of recurring services in there, which tends to be a little bit lower margin, but nothing fundamentally different in our view of where outcomes can continue to scale and grow its margins. Thank you very much.

Jonathan: No as we've talked in the past outcomes of silk still really a subscale business for us. So you will get variability from quarter to quarter, depending on the proportion of software licenses. There is in that particular quarter. So as we mentioned there was a lot of recurring services in naira, and which tends to be a little bit lower margins, but nothing fundamentally different in our view of warehouse.

Jonathan: We can continue to scale and grow its margins.

Speaker Change: Excellent. Thank you very much.

Speaker Change: Thank you.

Davis Sunderland: Thanks. And our next question, coming from the line of Davis Sunderland with Bear Dealing, is open. Hey, good morning, team.

Chip Moore: Our next question coming from the line of David <unk> line with Baird. Your line is now open.

Davis Sunderland: Thanks for your time. Thanks for my question. I wanted to first ask about devices and the strong gross margins there. I know part of this is due to mix and partly costs. I'm just wondering if you could maybe break out a bit more detail as to the contribution from each of these and what's assumed for the rest of the year on that front. And then there's a follow-up.

David: Hey, good morning team. Thanks for the time, thanks for taking my question.

David: Wanted to first ask about devices and the strong gross margins. There I know part of it is due to mix and part of the costs I'm. Just wondering if you could maybe break out a bit more detail as to the contribution from each of us and what's assumed for the rest of the year on that front and then I have a follow up.

Joan S. Hooper: Yeah, so again, we mentioned in the prepared remarks, and it's been consistent for the last several quarters, we've had a really favorable mix of water sales in Europe, which tend to have a higher margin than some of the other products that we sell. So we saw a continuation of that, not quite as high in Q1 as it was in Q4. But we will continue, I think, to see strong water sales. And, obviously, they've spent a lot of time in the last couple years just pruning the portfolio.

Speaker Change: Yes, So again, we mentioned in the prepared remarks, and it's been consistent the last several quarters. We've had a really favorable mix of water sales in Europe, which tend to be a higher margin than some of the other products that we sell so we saw a continuation of that and that is quite high in Q1 as it was in Q4.

Speaker Change: But.

Speaker Change: We will continue I think to see strong water sales and and obviously they've spent a lot of time in the last couple of years, just pruning the portfolio and as we get the factories loaded and we continue this year at up to close one factory that is primarily a devices factory that's kind of all built in our expectation so while we don't give or.

Davis Sunderland: And it, you know, as we get the factories loaded, and we continue this year to close one factory, that's primarily a device factory, that's kind of all built into our expectations. So while we don't give overall guidance by segment, you know, as we said last quarter, we sort of expect for the year's outcomes to be kind of flattish on the top line and continue to improve its margin over time to reach the aspirational targets that we communicated at investor day. Got it, that's helpful. And then maybe that's actually a good segue.

David: <unk> guidance by segment as we said last quarter, we sort of expect for the year outcomes to be kind of flattish on the top line and continue to improve its margin over time to reach the aspirational targets that we communicated at Investor day.

Thomas L. Deitrich: Could you just talk about new market opportunities, anything you're seeing, maybe specifically in Europe or elsewhere as it relates to water or any other new products? And then again, just what's embedded in the guide or what your assumptions are as it relates to that? Thank you.

Speaker Change: Got it that's helpful. And then maybe that's actually a good segway could you just talk about new market opportunities anything youre seeing maybe specifically in Europe or elsewhere as it relates to water or any of the new products and then again just what's embedded in the guide or what your assumptions are as it relates to that thank you.

Thomas L. Deitrich: We see good growth opportunities with that grid edge intelligence platform, as we talked about, which eventually ends up in both networks and outcomes segments for us. What's fueling that growth? It really is the automation of infrastructure. It's creating better visibility into the distribution network so that you can cope with rising demand and low variability. Things like hooking up an EV to the grid create an enormous variable load at a local spot.

Speaker Change: Sure I can take that one we see good growth opportunities.

Speaker Change: With that grid edge intelligence platform as we talked about which eventually ends up in both.

Speaker Change: Networks and outcomes segments for us, what's fueling that growth. It really is the automation of infrastructure, it's creating better visibility into.

Speaker Change: Distribution network. So that you can cope with rising demand and low variability things like.

Thomas L. Deitrich: Hooking up an EV to the grid it creates an enormous variable load at a local spot so in order to be able to cope with that and ensure resiliency and reliability you want to invest in your distribution grid.

Thomas L. Deitrich: So, in order to be able to cope with that and ensure resiliency and reliability, you want to invest in your distribution grid. As more generation and more transmission, it takes a bit longer to come by investing in non-wires alternatives to bring out efficiencies in your existing network drives growth. In the water and gas space, it is automation of the basics.

As more generation and more transmission is it takes a bit longer to come by.

Speaker Change: Besting in non wires alternatives to wring out efficiencies in your existing network drives growth in the water and gas space. It is automation of the basics its digitalization of that infrastructure drives growth and then finally.

Thomas L. Deitrich: It's the digitalization of that infrastructure that drives growth. And then, finally, there are good pockets of growth with some of the things we do in smart cities. So, automating lighting infrastructure inside of cities is an area that we see continued growth in. A smaller business for us, but it's a good pocket. Those are the things that drive overall business growth and generally are accruing to the networks and outcomes business, where we clearly have growth aspirations, as we laid out in the recent investor day. That's helpful.

Thomas L. Deitrich: There's good pockets of growth with.

Thomas L. Deitrich: Some of the things we do in smart cities.

Speaker Change: So while automating lighting infrastructure inside of cities is an area that we see.

Thomas L. Deitrich: Continued growth smaller business for us, but it's a good pocket those are the things that drive the overall business growth and generally are are accruing to the networks and outcomes business, where we clearly have.

Thomas L. Deitrich: Growth aspirations as we laid out in the recent Investor day.

Speaker Change: That's helpful. Thank you.

Davis Sunderland: Thank you. Thank you. And as a reminder, to ask a question, please press star 11.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question. Please press star one one.

Operator: And our next question coming from the line of Kashi Harrison with Barbara Sandler, your line is open. Good morning, all, and thanks for taking my questions. So, just, you know, picking up on a few earlier questions, you know, the load growth expectations do keep rising, most recently with the bigger cut update. I know, you know, the benefit may not be necessarily direct since a lot of this is from very large loads, but I was just wondering if there's a simplistic way we can think about, you know, some of the U.S. load growth expectations that underpin the long-term 4 to 6 percent forecast from the investor day, and then, you know, maybe some sort of sensitivity on, you know, what all these, you know, what all these changes in demand expectations could mean for your forecast.

Speaker Change: Next question coming from the line of <unk> Harrison with Piper Sandler Your line is now open.

Harrison: Good morning, all and thanks for taking my questions.

Harrison: So just picking up on a few earlier questions.

Harrison: Our growth expectations keep rising most recently with the bigger caught update.

Harrison: No the benefit may not be necessarily directly a lot of business from very large loads, but.

Harrison: I was just wondering a very simplistic way, we can think about some of the U S load growth expectation that underpin the long term, 4% to 6% forecast from the Investor Day, and then maybe some sort of sensitivity on on what I'll be.

Harrison: What all these changes in demand expectations could mean for your forecast.

Operator: So difficult to try to correlate it because there's a pretty wide gap between an overall demand forecast and what it looks like on a regional level for us. But if total electricity consumption for the U.S. was kind of flattish for, I don't know, 20 years from maybe 2000 to 2020, it starts to grow. And you're talking single-digit growth, either low single-digits, or some folks are talking about much higher percentage growth rates on electricity overall using the U.S. as an example. How do you think you can manage that?

Harrison: So difficult to try to correlate it because there's a pretty wide gap between and overall demand forecast and what it looks like on a regional level for us but.

Operator: If total electricity consumption for the U S was kind of flattish for.

Harrison: 20 years from maybe 2000 to 2020, it starts to grow and you're talking single digit growth.

Harrison: Either low single digits or some folks are talking about much higher percentage growth rates on electricity overall using the U S. As an example.

Joan Hooper: How do you how can you manage that it really does come down to you need more generation you need more transmission and youre going to have to invest pretty dramatically from.

Kasope Oladipo Harrison: It really does come down to you need more generation, you need more transmission, and you're going to have to invest pretty dramatically in a distribution network, which is where we play. So we think we're looking at low single digits to mid single digits in terms of total electricity growth. That's aligned to what most analysts are expecting, and that is what is underneath our investor day, longer-term targets for growth. If for some reason it were to go faster, that clearly would be a tailwind for our business. But it's that low to mid single-digit overall electricity growth which is part of our underlying thesis for business growth. That's a very helpful context sentence.

Kasope Oladipo Harrison: Distribution network, which is where we play so we think we're looking at low single digits to mid single digits in terms of total electricity growth that's aligned to what most analysts are expecting and that is what is underneath our.

Harrison: Investor day longer term targets for growth if for some reason it where to go faster that clearly would be a tailwind for our business, but it's that low to mid single digit overall electricity growth, which is part of our underlying thesis for core business growth.

Thomas L. Deitrich: I appreciate it. And then the revenue outperformance in Q1 and then, to some extent, Q2, is there a way to think about how much of this is backlog pull forward versus incremental book and ship business? Just trying to think through if you outperform this year, it could end up pulling some revenues from 2025 and maybe perhaps impact how we should be thinking about year-on-year growth. Well, again, I'd say we entered the year assuming that we had about 125 million of that previously supply-constrained revenue.

Speaker Change: That's very helpful context, I appreciate it.

Thomas L. Deitrich: And then but the revenue outperformance in.

Thomas L. Deitrich: In Q1, and then I guess Q2 to some extent.

Harrison: Is there a way to think about how much of this is backlog pull forward versus incremental book and ship business.

Thomas L. Deitrich: Just trying to think through if you outperform this year.

Thomas L. Deitrich: It could end up pulling some revenues from 2025 and maybe perhaps.

Harrison: Yes.

Harrison: Impact, how we should be thinking about year on year growth.

Thomas L. Deitrich: When we initially did Q1 guidance, we were sort of thinking, you know, half in Q1, half in Q2. In reality, it was more like 85 million in Q1 and 40 in Q2. So part of it, when you look at the guidance we gave for the second quarter, it's kind of flat sequentially. And that's really the reason why. So that's probably the best color I can get.

Thomas L. Deitrich: Well again I would say we entered the year, assuming that we had about $125 million of that previously supply constrained revenue. When we initially did Q1 guidance, we were sort of thinking happened Q1 half in Q2.

Thomas L. Deitrich: In reality it was more like $85 million in Q1 and 40 in Q2, so part of it when you look at the guidance, we gave for second quarter, its kind of flat sequentially and Thats really the reason why.

Kasope Oladipo Harrison: Again, second half of the year for now, you know, I think where you guys settled out based on our original four-year guidance for the second half is probably the right level at this point. Helpful, thanks. And maybe just one more, if I may, you know, you shared some color earlier on on the margins from the outcome segment, but I was wondering if we could talk a little bit about network solutions, very robust at, I want to say 37%. What, what, what were the drivers there?

Thomas L. Deitrich: So that's probably the best color I can again second half of the year for now I think I think where you guys settled out based on our original full year guidance for the second half is probably.

Kasope Oladipo Harrison: The rate level at this point.

Speaker Change: Helpful. Thanks, and maybe just one more if I may.

Kasope Oladipo Harrison: You shared some color earlier on the margins from the outcomes segment, but I was wondering if you could talk a little bit about network solutions very robust.

Kasope Oladipo Harrison: I want to say, 37%.

Kasope Oladipo Harrison: What what what were the drivers there and how sustainable.

Kasope Oladipo Harrison: Are these margins through the through the rest of the year.

Joan S. Hooper: And how sustainable are these margins through the rest of the year? Yeah, the network's Q1 margin was unusually high, I would say. So that's the primary reason the margins were so high.

Speaker Change: Yes. The networks Q1 margin was unusually rich I would say so that's the primary.

Kasope Oladipo Harrison: So if you looked at our investor day targets, you know, essentially, networks hit them in Q1 at 37%. So I don't, I don't think it's sustainable in the near term. I think that's still the right longer-term target for them.

Joan S. Hooper: The margins were so high so if you looked at our Investor day targets essentially network hit it in Q1 and 37%. So I don't I don't think it's sustainable in the near term I think that's still the right longer term target for them and if you again, if you look at.

Joan S. Hooper: And again, again, if you look at the Q2 guidance we provided from an earnings perspective, it's lower than Q1 on the same revenue. And that phenomenon is primarily related to our assumption that network margins will not be as strong in Q2 as they were in Q1. Okay.

Kasope Oladipo Harrison: The Q2 guidance, we provided from an earnings perspective, it's lower than Q1 on the same revenue and that phenomenon is primarily related to our.

Joan S. Hooper: Our assumption that networks margins will not be as strong in Q2 as they were in Q1.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Kasope Oladipo Harrison: And our next question, coming from the line of Joseph Osha with Guggenheim Partners, your line is open. Hi there, thanks for taking my call. I have two more strategic questions. First, I was wondering if you could maybe talk a little bit more about the opportunities you see for digitizing the water metering infrastructure. Living here in California, that seems to be something that's coming up a lot.

Speaker Change: And our next question coming from the line of <unk>.

Kasope Oladipo Harrison: Joseph Osha with Guggenheim Partners. Your line is open.

Joseph Amil Osha: And then I have one other question. Sure. The majority of water systems around the globe are generally mechanical in nature at this point.

Joseph Amil Osha: Hi, there thanks for taking my call I had two more strategic questions. First I was wondering if you could maybe talk a little bit more about the opportunities you see for digitization of the water metering infrastructure living here in California that seems to be something that's that's coming up a lot and then I have one.

Joseph Amil Osha: Another question.

Thomas L. Deitrich: And I would say that sometimes there are manual reads; sometimes there are walk-by or drive-by reads. But moving that to be a digitized infrastructure where you can get two-way communication to the meter itself clearly is a big productivity opportunity for utilities around the globe. You wouldn't need to drive around the neighborhood.

Joseph Amil Osha: Sure.

Joseph Amil Osha: The majority of our water systems are around the globe are generally mechanical in nature to this point and.

Thomas L. Deitrich: I would say that.

Thomas L. Deitrich: Sometimes there are manual read sometimes there are walk by or drive by reads, but moving that to be a digitized infrastructure, where you can get two way communication to the to the meter itself clearly is a big productivity opportunity for.

Thomas L. Deitrich: Utilities around the globe, you would need to drive around the neighborhood you can get all the data from behind a pane of glass and be able to create more accurate billing for your customers. So that's one sort of basic trend once you have that infrastructure in place.

Thomas L. Deitrich: You can get all the data from behind a pane of glass and be able to create more accurate billing for your customers. So that's one sort of basic trend. Once you have that infrastructure in place, now that you have access to much richer sets of data, you can be looking at what's happening on an ongoing basis at regular intervals, and you can understand what's happening within your water infrastructure. Do you have a leak in a pipe somewhere? Is the homeowner got a leak inside of the house?

Thomas L. Deitrich: Now because you have access to much richer sets of data you can be looking at what's happening on an ongoing basis.

Thomas L. Deitrich: At regular intervals and you could understand whats happening within your water infrastructure.

Thomas L. Deitrich: Do you have a leak.

Thomas L. Deitrich: In a pipe somewhere is the homeowner got to got a leak inside of the house and you can start to add value added services on top of that to reduce losses.

Thomas L. Deitrich: And you can start to add value-added services on top of that to reduce losses and create a better consumer engagement. It is that progression all the way from just automating the basics all the way up to a tighter relationship with the consumer and the reduction of losses in scarce environments. That's what fuels the digitization of the water infrastructure. It's that trend which we see playing out on a global level.

Thomas L. Deitrich: And create a better consumer engagement. It is that progression all the way from just let's automate the basics all the way up to a tighter relationship with the consumer and the.

Thomas L. Deitrich: Reduction of losses and scarce environments.

Thomas L. Deitrich: That's what fuels that digitization of the water infrastructure is that trend, which we see playing out on a on a global level.

Thomas L. Deitrich: And I guess, just is this something that could begin to become material for you? Because, as you point out, it's all mechanical, it's all pits in front of front yards, but you've got really quite meaningful efforts at the municipal level to bring water usage under control.

Thomas L. Deitrich: And I guess is this.

Thomas L. Deitrich: It's something that could begin to become material for you because as you pointed out it's all mechanical it's all puts and projects fronts.

Thomas L. Deitrich: But you've got really quite meaningful efforts at the municipal level to bring water usage under control I mean, so is this something we could wake up for the year.

Joseph Amil Osha: I mean, is this something we could wake up in a year or 18 months and discover is a much more material opportunity for you relative to the other things you're doing? I mean, I still think there's probably bigger growth as a percentage in the electricity space for a lot of the macro trends that we talked about earlier in this call. That doesn't take anything away from water growth.

Joseph Amil Osha: Year, or 18 months and discover as a much more material opportunity for you relative to the other things you're doing.

Joseph Amil Osha: I mean, I still think there is probably bigger growth as a percentage in the electricity space for a lot of the macro trends that we talked about earlier in this call.

Joseph Amil Osha: That doesn't take anything away from from water growth there is still growth in that area as well so we see both growing.

Joseph Amil Osha: As a percentage, but probably electricity is a little bit faster our water business today is a meaningful portion of the company we've talked about it for three or four quarters running now is running a bit ahead of expectations.

Thomas L. Deitrich: There's still growth in that area as well. So we see both growing as a percentage, but probably electricity is a little bit faster. Our water business today is a meaningful portion of the company. We've talked about it for three, four quarters running now, and it's running a bit ahead of expectations. And it's still a big part of what we do.

Thomas L. Deitrich: And it's still a big part of what we do so I don't know maybe 2025% of total revenue is coming through that space.

Thomas L. Deitrich: So I don't know, maybe 20-25% of total revenue is coming through that space. Okay, thank you. And then the second strategic question, you know, looking at this helps us deal with the many things you said about, you know, helping your utility customers have better visibility into the local distribution grid, you know, makes great makes great sense. It's awesome.

Speaker Change: Okay. Thank you and then second strategic question Youre looking at this <unk> deal and the many things you've said about helping your utility customers have better visibility into the local distribution grid make great makes great sense, It's awesome I agree with you.

Thomas L. Deitrich: One of the things that people talk about is the potential to sort of take that next step.

Thomas L. Deitrich: And begin to.

Thomas L. Deitrich: Work with utilities in homeowners on controlling behind the meter loads right, so span, which I'm sure you're familiar with has done a deal with <unk> this year.

Joseph Amil Osha: I agree with you. Um, one of the things that your people talk about is the potential to sort of take that next step and begin to work with utilities and homeowners on controlling, you know, behind the meter loads, right? So, SPAN, which I'm sure you're familiar with, has done a deal with Landis McGeer. I'm just wondering if we could see part of your acquisition strategy in the coming year to begin to focus not just on this grid but local visibility for utilities but also beginning to face off against, you know, customers behind the meter and address this other potential part of the challenge, which is low, low control.

Joseph Amil Osha: I'm just wondering is could we see part of your acquisition strategy in the coming year or two begin to focus not just on this grid local visibility for utilities, but also beginning to face off against customers behind the meter and address this other other potential part of it.

Joseph Amil Osha: <unk>, which is look you load control.

Joseph Amil Osha: Certainly, we believe that the growth in distributed energy resources in front of and behind the meter on the side of the house is going to continue to grow dramatically. That's just going to happen. I don't see any way that it would not.

Speaker Change: Certainly we believe that the growth in distributed energy resources in front of and behind.

Joseph Amil Osha: The meter on the side of the house is going to continue to grow dramatically.

Joseph Amil Osha: That's just going to happen.

Joseph Amil Osha: I don't see any way that it would not how do you control and optimize the use of all of those assets is where I think we've got a really unique and interesting value proposition. So when you start to think about things like demand response, where we have.

Thomas L. Deitrich: How do you control and optimize the use of all of those assets, where I think we've got a really unique and interesting value proposition? So, when you start to think about things like demand response, where we have the IntelliSource platform that allows the thermostat inside someone's house to be adjusted to manage the load and shed load in a difficult situation, having hundreds of megawatts under that platform of control, we expect that business to grow, and we think it's going to become more and more of a fine-grain capability.

Thomas L. Deitrich: <unk> platform that allows the.

Thomas L. Deitrich: The thermostat inside someone's house to be adjusted to manage load and shed logo in a difficult situation.

Thomas L. Deitrich: Having hundreds of megawatts under that platform of control, we expect that business to grow and we think it's going to become more and more fine grain capabilities. So helping the utilities cope with that helping consumers understand how they are utilizing an asset we're making those assets part of.

Thomas L. Deitrich: So, helping the utilities cope with that, helping consumers understand how they are utilizing an asset or making those assets part of the larger macro solution is clearly a growth area, which that grid edge intelligence platform that we've talked about is firmly targeted and well-advanced in terms of adding more and more capability. All right. Thank you very much.

Thomas L. Deitrich: The larger macro solution is clearly a growth area, which that grid edge intelligence platform that we've talked about is firmly targeted and well advanced in terms of adding more and more capability.

Speaker Change: Alright, Thank you very much.

Speaker Change: Thank you.

Speaker Change: And again as a reminder, we'd like to ask a question. Please press star one on your telephone.

Canaccord: And our next question is coming from the line of similar with Canaccord. Your line is now open.

Speaker Change: Hi, good morning, Great quarter. So just my first question here, how much of the backlog that was not inflation index still needs to be shipped and do you view that as more of a Q2 or second half expectation.

Thomas L. Deitrich: The total backlog.

Thomas L. Deitrich: Still in the range of 70, 30 meeting, 70% is either new or re priced or shorter term pricing.

Thomas L. Deitrich: Pricing levels, there is still 30% a little less debt is.

Thomas L. Deitrich: Not repriced are not protected indexed in some way.

Thomas L. Deitrich: That range Hasnt materially changed over the last couple of months, we're still within a few percentage points of that.

Thomas L. Deitrich: The majority of that 30% pre priced if you will or not.

Thomas L. Deitrich: Not repriced backlog flows through in roughly the next step a year or two so it's still going to trickle out over time itself, but we're continuing to eat through it overall, it's part of that.

Thomas L. Deitrich: Expectations that where we are managing for the full year.

Thomas L. Deitrich: Okay and then just another question does your long term guidance that was issued during the Investor day factor in improved the lead times for chips and other components in terms of being reduced further and getting closer to.

Thomas L. Deitrich: Pre COVID-19 levels, and enabling higher shipment turnaround or are you sort of expecting the same kind of lead times that <unk> been seeing recently.

Thomas L. Deitrich: We're running our business with with roughly the lead times that we see today, obviously, if they were to continue to improve.

Thomas L. Deitrich: There's opportunity there to be a bit more responsive but.

Speaker Change: Our outlook.

Thomas L. Deitrich: Expect a meaningful change for <unk> for.

Thomas L. Deitrich: For the year, we're pleased with the level of supply chain performance that we're getting today, we are going to carry a little bit more inventory to manage that.

Thomas L. Deitrich: Anything that goes bump in the night.

Thomas L. Deitrich: In the in the year ahead, but it doesn't require a dramatic change in component lead times for us too.

Thomas L. Deitrich: We continue to operate at the present level.

Speaker Change: Excellent thanks for the insights.

Speaker Change: Thank you.

Speaker Change: Thank you.

Thomas L. Deitrich: I'm showing no further questions from mechanic at this time I will now turn the call back over to Mr. Tom Deitrich for any closing remarks.

Speaker Change: Thank you very much for joining the call today, we look forward to updating you again in a few months for Q2.

Speaker Change: Ladies and gentlemen, this does conclude our conference for today. Thank you for your participation you may now disconnect.

Thomas L. Deitrich: Okay.

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Speaker Change: Thank you.

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Speaker Change: Thank you.

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Speaker Change: Thank you.

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Austin Nathan Moeller: Thank you. And again, as a reminder, if you'd like to ask a question, please press star one one on your telephone. And for the next question coming from the line between us and Moeller with Canada Court, your line is open.

Speaker Change: Good day, ladies and gentlemen, thank you for standing by.

Moeller: I trials first quarter 'twenty 'twenty four earnings release conference call.

Moeller: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advisory wireless space.

Speaker Change: Please note that today's conference is being recorded.

Thomas L. Deitrich: Hi, good morning, great quarter. So just my first question here, how much of the backlog that was not an inflation index still needs to be shipped? And do you view that as more of a Q2 or second half expectation? The total backlog is still in the range of 70-30, meaning 70% is either new or repriced or shorter term pricing levels. There's still 30%, a little less, that is not repriced or not protected in some way.

Austin Nathan Moeller: I will now hand, the conference over to your Speaker House, So Paul Vincent Vice President of Investor Relations. Please go ahead Sir.

Speaker Change: Good morning.

Austin Nathan Moeller: That range hasn't materially changed over the last couple of months. We're still within a few percentage points of that. The majority of that 30% pre-priced, if you will, or not repriced backlog flows through in roughly the next year or two. So it's still going to trickle out over time, but we're continuing to eat through it overall. And it's part of the expectations that we are managing for the full year. Okay, and then there is just one more question.

Speaker Change: And welcome to <unk> first quarter 2024 earnings conference call.

Austin Nathan Moeller: Tom Dietrich, <unk>, President and Chief Executive Officer and.

Austin Nathan Moeller: Joan Hooper Senior Vice President and Chief Financial Officer will review <unk> first quarter results and provide a general business update and outlook.

Austin Nathan Moeller: Earlier today, the company issued a press release announcing its results.

Austin Nathan Moeller: This release also includes details related to the conference call and webcast replay information.

Austin Nathan Moeller: Accompanying today's call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab.

Speaker Change: Following prepared remarks, the call will open for questions using the process. The operator described.

Speaker Change: Before Tom begins a reminder, that our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance.

Austin Nathan Moeller: Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website.

Speaker Change: We will be making statements. During this call that are forward looking.

Austin Nathan Moeller: These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Austin Nathan Moeller: Actual results could differ materially from these expectations because of factors that were presented in today's earnings release and comments made during this conference call as well as those presented in the risk factors section of our Form 10-K, and other reports and filings with the Securities and Exchange Commission.

Austin Nathan Moeller: 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 May <unk> 2024 may materially change and we do not undertake any duty to update any of our forward looking statements.

Austin Nathan Moeller: Now please turn to page four of our presentation as our CEO, Tom Dietrich begins his remarks.

Thomas L. Deitrich: Does your long-term guidance that was issued during the investor day factor in improved lead times for chips and other components in terms of being reduced further and getting closer to pre-pre COVID levels and enabling higher shipment turnaround? Or are you sort of expecting the same kind of lead times that you've been seeing recently? Yeah, we're running our business with roughly the lead times that we see today. Obviously, if they were to continue to improve, there's opportunity there to be a bit more responsive, but our outlook doesn't expect a meaningful change for the year.

Speaker Change: Thank you Paul good morning to everyone and thank you for joining our call.

Thomas L. Deitrich: We're pleased with the level of supply chain performance that we're getting today. We are going to carry a little bit more inventory to manage anything that goes bump in the night in the year ahead, but it doesn't require a dramatic change in component lead times for us to continue to operate at the present level. Excellent. Thanks for the insights. Thank you. Thank you. And I'm showing no further questions from the Q&A queue at this time. I will now turn the call back over to Mr. Tom Dietrich for any closing remarks.

Thomas L. Deitrich: Operational execution and market conditions improved for the sixth consecutive quarter and our entire value chain from component supply to field installation performed better than anticipated, which increased our top and bottom line results.

Thomas L. Deitrich: Market interest and adoption of our grid edge intelligence platform continued to grow and our pipeline of opportunities is expanding as our customers accelerate their adoption of new digital technology and non wires grid solutions.

Thomas L. Deitrich: In addition to organic growth through innovation M&A is a key strategic initiative of ours and during the quarter, we acquired Opus squared.

Thomas L. Deitrich: We now have added real time power flow analysis, and grid planning capabilities to our offerings furthering our capacity to scale the outcomes segment more rapidly in the years ahead.

Thomas L. Deitrich: Thank you very much for joining us on the call today. We look forward to updating you again in a few months for Q2. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect. Thanks for watching! Copyright 2020 Mooji Media Ltd. All Rights Reserved.

Thomas L. Deitrich: Now looking at slide five financial highlights for the first quarter include.

Operator: No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. Blue Cross Blue Shield is a proud sponsor of Second Opinion. Live Fearless.

Operator: Transcription by Trans-Expert at Fiverr.com, ?? ?? ?? ?? ?? ?? ?? [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] Good day, ladies and gentlemen. Thank you for standing by. Welcome to ITRON's first quarter 2024 earnings release conference call. At this time, all participants are on a listen-only mode.

Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 1-1 on your telephone. You will then hear an automatic message device in your hand as it is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Sir Paul Vincent, Vice President for Investigation. Please go ahead, sir.

Operator: Year over year revenue grew 22% to $603 million adjusted EBITDA of $76 million, an increase of 94% year over year non-GAAP earnings per share of $1.24 an increase of 153%.

Paul Vincent: Good morning, and welcome to ITRON's first quarter of 2024 earnings conference. Tom Dietrich, ITRON's President and Chief Executive Officer; Joan Hooper, Senior Vice President and Chief Financial Officer. We'll review Itron's first quarter results and provide a general business update. Earlier today, the company issued a press release announcing its results. This release also includes details related to the conference call and webcast replay information. Accompanying today's call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab.

Paul Vincent: And free cash flow of $34 million, an increase of approximately $40 million year over year.

Paul Vincent: Turning to slide six the backlog at the end of the first quarter was $4 3 billion bookings for the first quarter of $361 million reflects normal seasonality and the timing of new bookings, we maintained our full year outlook for a book to bill ratio of one to one or greater.

Paul Vincent: Across our customer base engagement it related to <unk> grid edge intelligence platform continues to grow due to a variety of factors, including <unk>.

Paul Vincent: Data center related demand growth re industrialization and production localization and electrification of transportation in the hole.

Paul Vincent: Water scarcity and the automation of water infrastructure safety applications for gas customers and the digitalization of their operations.

Paul Vincent: Notable backlog added during the quarter includes Oklahoma gas and electric renewed their long standing partnership with iPhone. This agreement consolidates, a comprehensive range of hardware software and services across <unk> territory and enables the adoption of new technology as their needs evolve.

Paul Vincent: Also during the quarter the city of Fort Collins selected <unk> to provide a distributed energy resource management solution to manage demand response energy efficiency and customer engagement programs.

Paul Vincent: <unk> software solution provides a single enterprise platform to support control strategies for a range of use cases, including EV charging and battery management.

Paul Vincent: Following prepared remarks, the call will open for questions using the process the operator described. Before Tom begins, a reminder that 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.

Paul Vincent: Now John will provide details about our first quarter and our outlook for the second quarter.

Paul Vincent: 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 uncertainty. Actual results could differ materially from these expectations because of factors that were presented in today's earnings release and comments made during this conference, as well as those presented in the Risk Factors 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 good faith.

Paul Vincent: Thank you Tom Please turn to slide seven for a summary of consolidated GAAP results.

Paul Vincent: Unknown Speaker, Unknown Attendee, Scott Graham, Unknown Speaker, Unknown Attendee, Materials discussed today, May 2, 2024, may materially change, and we do not undertake any duty to update any of our forward-looking statements. Now please turn to page 4 of our presentation as our CEO, Tom Deitrich, begins his remarks. Thank you, Paul.

Paul Vincent: First quarter revenue of 603 million increased 22% year over year and was our highest level since the fourth quarter of 2019.

Thomas L. Deitrich: Good morning to everyone, and thank you for joining our call. Operational execution and market conditions improved for the sixth consecutive quarter, and our entire value chain from component supply to field installation performed better than anticipated, which increased our top and bottom line results. Market interest and adoption of our grid edge intelligence platform continue to grow, and our pipeline of opportunities is expanding as our customers accelerate their adoption of new digital technology and non-wired grid solutions.

Paul Vincent: The growth was driven by conversion of previously constrained revenue and continued customer demand.

Thomas L. Deitrich: In addition to organic growth through innovation, M&A is a key strategic initiative of ours, and during the quarter, we acquired Elpis Square. We now have added real-time power flow analysis and grid planning capabilities to our offerings, furthering our capacity to scale the outcomes segment more rapidly in the years ahead. Now looking at slide five, financial highlights for the first quarter include: Year-over-year revenue grew 22% to $603 million, adjusted EBITDA of $76 million, an increase of 94% year-over-year, non-GAAP earnings per share of $1.24, an increase of 153%, and free cash flow of $34 million, an increase of approximately $40 million year over year. Turning to slide six, the backlog at the end of the Bookings for the first quarter of $361 million reflect normal seasonality and the timing of new bookings.

Thomas L. Deitrich: You May recall, we entered 2024 with approximately $125 million of previously constrained revenue.

Thomas L. Deitrich: And then half of this was fulfilled in the first quarter, which resulted in higher than expected revenue.

Thomas L. Deitrich: Gross margin of 34% with 240 basis points higher than last year, primarily due to favorable product mix and operational efficiencies.

Thomas L. Deitrich: GAAP net income of 52 million or $1 12 per diluted share compares to a loss of $12 million or <unk> 26 per share in the prior year. The improvement was driven by higher operating income due in part to a restructuring charge booked in the prior year.

Thomas L. Deitrich: Regarding non-GAAP metrics on slide eight non-GAAP operating income of $67 million increased to 115% year over year.

Thomas L. Deitrich: Adjusted EBITDA of 76 million nearly doubled from the prior year.

Thomas L. Deitrich: non-GAAP net income for the quarter was $57 million or $1 24 per diluted share versus 49, a year ago. This quarter was a record high for non-GAAP earnings per share.

Thomas L. Deitrich: Free cash flow was $34 million in Q1 versus negative $5 million a year ago, the improvement reflect significant year over year earnings growth.

Thomas L. Deitrich: Year over year revenue comparisons by business segment on slide nine.

Thomas L. Deitrich: Device solutions revenue of $127 million increased $7 million or 6% on a constant currency basis, driven by growth in water meter and communication module sales in the EMEA region.

Thomas L. Deitrich: Network solutions revenue of $408 million, a new quarterly record increased 30% year over year.

Thomas L. Deitrich: Revenue growth was driven by improved component availability operational efficiencies and project scheduling alignment.

Thomas L. Deitrich: Outcomes revenue of $69 million increased 10% year over year, primarily due to an increase in recurring revenue.

Thomas L. Deitrich: Moving to the non-GAAP year over year EPS Bridge on Slide 10, our Q1, non-GAAP EPS increased 75 per share year over year to $1 24 per diluted share.

Thomas L. Deitrich: Pre tax operating performance contributed <unk> 88 per share year over year improvement driven by the fall through of higher revenue and gross profit, partially offset by higher operating expenses.

Thomas L. Deitrich: Higher tax expense had a negative year over year impact of <unk> 11 per share and FX and share count had a negative <unk> <unk> per share impact.

Thomas L. Deitrich: Turning to slides 11 through 13, I'll cover Q1 segment results compared with the prior year.

Thomas L. Deitrich: Device solutions revenue was 127 million gross margin was 23, 7% and operating margin was 17, 1%.

Thomas L. Deitrich: Gross margin was up 360 basis points year over year in operating margin was up 520 basis points, reflecting a higher value product mix and operational efficiencies.

Thomas L. Deitrich: Network solutions revenue was $408 million with gross margin of 37, 1% and operating margin of 28, 6%.

Thomas L. Deitrich: Gross margin increased 340 basis points year over year in operating margin was up 470 basis points due to favorable product mix and volume related efficiencies.

Thomas L. Deitrich: Outcomes revenue was $69 million with gross margin of 35, 1% and operating margin of 13, 1%.

Thomas L. Deitrich: Gross margin decreased 760 basis points year over year, and operating margin was down 740 basis points due to a lower margin revenue mix and increased services costs.

Thomas L. Deitrich: Turning to slide 14, I'll review liquidity and debt at the end of the first quarter.

Thomas L. Deitrich: Total debt was $460 million and net debt was $159 million net leverage was 0.6 times at the end of Q1 and cash and equivalents were $301 million.

Thomas L. Deitrich: During the first quarter, we acquired Opus square for cash consideration of approximately $34 million.

Thomas L. Deitrich: Now please turn to slide 15 for our second quarter outlook, we anticipate Q2 revenue to be within a range of $595 million to $605 million, an 11% year over year increase at the midpoint.

Thomas L. Deitrich: We expect the remaining approximately $40 million of previously constrained revenue will be delivered in the second quarter and this is reflected in our outlook.

Thomas L. Deitrich: We anticipate second quarter non-GAAP EPS to be within a range of 90 to $1 per diluted share, which at the midpoint is approximately 46% year over year growth.

Thomas L. Deitrich: Now I will turn the call back to Tom.

Speaker Change: Thank you Joan.

Thomas L. Deitrich: We maintain our four-year outlook for a book-to-bill ratio of one-to-one or greater. Across our customer base, engagement related to Itron's grid edge intelligence platform continues to grow due to a variety of factors, including data center related demand growth, reindustrialization and production localization, and electrification of transportation and the home. Water Scarcity and the Automation of Water Infrastructure, Safety Applications for Gas Customers, and the Digitalization of their Operations

Thomas L. Deitrich: Our grid edge intelligence platform is at the core of our ability to innovate and continue to offer our customers advanced solutions that address the growing complexity of the energy and water management two recent milestones signify the scale and breadth of <unk> solutions. The differentiated services, we offer through our outcomes segment are a competitive advantage.

Thomas L. Deitrich: Notable backlog added during the quarter includes Oklahoma Gas and Electric renewing their longstanding partnership with Itron. This agreement consolidates a comprehensive range of hardware, software, and services across OG&E's territory and enables the adoption of new technology as their needs evolve. Also during the quarter, the City of Fort Collins selected Itron to provide a distributed energy resource management solution to manage demand response, energy efficiency, and customer engagement programs. Itron's software solution provides a single enterprise platform to support control strategies for a range of use cases, including EV charging and battery management.

Joan S. Hooper: Now Joan will provide details about our first quarter and our outlook for the second quarter. Thank you, Tom. Please turn to slide seven for a summary of consolidated gap results. First quarter revenue of $603 million increased 22% year over year and was our highest level since the fourth quarter of 2019. The growth was driven by conversion of previously constrained revenue and continued customer demand. You may recall we entered 2024 with approximately 125 million in previously constrained revenue.

Joan S. Hooper: More than half of this was fulfilled in the first quarter, which resulted in higher than expected revenue and a gross margin of 34%, 240 basis points higher than last year, primarily due to favorable product mix and operational efficiency. Gap net income of $52 million or $1.12 per diluted share compares to a loss of $12 million or $0.26 per share in the prior year.

Joan S. Hooper: The improvement was driven by higher operating income due in part to a restructuring charge booked in the prior year. Regarding non-GAAP metrics on slide eight, non-GAAP operating income of 67 million increased 115% year over year. Adjusted EBIT of $76 million nearly doubled from the prior year. Non-GAAP net income for the quarter was $57 million or $1.24 per diluted share versus 49 cents a year ago.

Joan S. Hooper: Vintage and we are honored to have recently surpassed 100 million endpoints under <unk> management 365 days per year 24 hours per day.

Joan S. Hooper: This quarter was a record high for non-GAAP earnings per share. Pre-cash flow was $34 million in Q1 versus negative $5 million a year ago. The improvement reflects significant year-over-year earnings growth. Year-over-year revenue comparisons by business segment are on slide nine. Device Solutions revenue of $127 million increased $7 million, or 6% on a constant currency basis, driven by growth in water meter and communication module sales in the EMEA region.

Joan S. Hooper: Network Solutions revenue of $408 million, a new quarterly record, increased 30% year over year. Revenue growth was driven by improved component availability, operational efficiencies, and project scheduling alignment. Outcomes revenue of $69 million increased 10% year over year, primarily due to an increase in recurring revenue. Moving to the non-GAAP year-over-year EPS bridge on slide 10. Our Q1 non-GAAP EPS increased 75 cents per share year-over-year to $1.24 per diluted share.

Joan S. Hooper: This is possible due to the consistent delivery of reliable critical infrastructure and the trust that a wide range of customers have granted.

Joan S. Hooper: Pre-tax operating performance contributed $0.88 per year of year-over-year improvement driven by the fall through of higher revenue and gross profit partially offset by higher operating expenses. Higher tax expense had a negative year-over-year impact of $0.11 per share, and FX and share count had a negative $0.02 per share impact. Turning to slides 11 through 13, I will cover Q1 segment results compared with the prior year. Device Solutions revenue was 127 million. Gross margin was 23.7%, and operating margin was 17.1%. Gross margin was up 360 basis points year over year, and operating margin was up 520 basis points, reflecting a higher value product mix and operational efficiencies.

Joan S. Hooper: Additionally, a longstanding customer excel energy recently deployed it's 2 million distributed intelligence endpoint and continues to expand its deployment. These endpoints are critical and <unk> efforts to provide cleaner safer and more reliable energy to their customers across eight states.

Joan S. Hooper: Network Solutions revenue was $408 million with a gross margin of 37.1% and an operating margin of 28.6%; gross margin increased 340 basis points year over year and operating margin was up 470 basis points due to favorable product mix and volume related deficiencies. Outcomes revenue was $69 million with a gross margin of 35.1% and an operating margin of 13.1%. Gross margin decreased 760 basis points year over year, and operating margin was down 740 basis points due to a lower-margin revenue mix and increased services costs.

Joan S. Hooper: This milestone is an important marker as the nature of what we do requires careful planning and project resiliency.

Joan S. Hooper: Finally during the quarter, we hosted an investor day.

Joan S. Hooper: Presentations include detailed discussions of our grid edge intelligence platform customer testimonials and a comprehensive segment level discussion, new long term financial targets and a virtual technology demonstration I encourage anyone interested in learning more about <unk> to visit our website, where these presentations.

Joan S. Hooper: Or available for replay.

Joan S. Hooper: Turning to slide 14, I'll review liquidity and debt at the end of the first quarter. Total debt was $460 million, and net debt was $159 million. Net leverage was 0.6 times at the end of Q1, and cash and equivalents were $301 million. During the first quarter, we acquired Elpis Squared for a cash consideration of approximately $34 million. Now, please turn to slide 15 for our second quarter out. We anticipate Q2 revenue to be within a range of $595 to $605 million, an 11% year-over-year increase at the midpoint.

Speaker Change: Thank you for joining us today operator, please open the line for some questions.

Joan S. Hooper: We expect the remaining approximately $40 million of previously constrained revenue will be delivered in the second quarter, and this is reflected in our outlook. We anticipate second quarter non-gap EPS to be within a range of 90 cents to a dollar per diluted share, which at the midpoint is approximately 46% year over year growth. Now, I'll turn the call back to Thomas. Thank you, Joan.

Speaker Change: Thank you, ladies and gentlemen to ask a question you will need to press star one one on your telephone and wait my name to be announced soon.

Thomas L. Deitrich: Our grid edge intelligence platform is at the core of our ability to innovate and continue to offer our customers advanced solutions that address the growing complexity of energy and water management. Two recent milestones signify the scale and breadth of Itron's solutions. The differentiated services we offer through our outcomes segment are a competitive advantage, and we are honored to have recently surpassed 100 million endpoints under Itron management, 365 days a year, 24 hours a day.

Thomas L. Deitrich: This is possible due to the consistent delivery of reliable, critical infrastructure and the trust that a wide range of customers have given. Additionally, a long-standing customer, Accel Energy, recently deployed its two millionth distributed intelligence endpoint and continues to expand its deployment. These endpoints are critical in Accel's efforts to provide cleaner, safer, and more reliable energy to its customers across eight states. This milestone is an important marker as the nature of what we do requires careful planning and project resilience.

Thomas L. Deitrich: Finally, during the quarter, we hosted an Investor Day. Presentations included detailed discussions of our grid edge intelligence platform, customer testimonials, a comprehensive segment level discussion, new long-term financial targets, and a virtual technology demonstration. I encourage anyone interested in learning more about ITRON to visit our website, where these presentations are available for replay. Thank you for joining us today.

Operator: Operator, please open the line for some questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1 1 again.

Thomas L. Deitrich: <unk>. Your question. Please press star one again.

Operator: And by while we compile the Q&A roster.

Noah Duke Kaye: Please stand by while we compile the Q&A roster, and our first question comes from the line of Noah Kaye with Oppenheimer. Your line is open. Thanks so much.

Operator: Our first question coming from the line of Noel.

Noah Duke Kaye: Kim with Oppenheimer. Your line is open.

Noah Duke Kaye: You know, it's almost implied in the results and, you know, your commentary around catching up on the deferred revenue in 2Q. But, just as a sanity check, can you talk about the overall health of the supply chain and manufacturing efficiencies of the company at this point? And what, if any, improvements are you still looking for as we move into the back half of the year? Sure, happy to do so. The numbers that are in the Q1 results and implied in the outlook for the second quarter had us finishing up that roughly $125 million of deferred backlog that we had coming into the year.

Noah Duke Kaye: Thanks, so much.

Noah Duke Kaye: It's almost implied in the results in.

Noah Duke Kaye: Your commentary around catching up on the deferred revenue in <unk>, but.

Noah Duke Kaye: Just as I say check can you talk about the overall health of the supply chain and manufacturing efficiencies of the company at this point and what if any improvements you still are looking for as we move into the back half of the year.

Speaker Change: Sure happy to do so.

Noah Duke Kaye: The numbers that are in the Q1 results and implied in the outlook for the second quarter had us, finishing up that roughly $125 million of.

Noah Duke Kaye: Deferred.

Speaker Change: Backlog that we had coming into the year. So that is what's in the numbers that you've seen.

Thomas L. Deitrich: So that is what's in the numbers that you've seen. What allowed that catch-up to go a little bit faster than we had originally anticipated in Q1, for example, was better component supply, factories running at a good clip all the way through the process to get logistics work done to ship products and complete field installation, which allows us to recognize revenue. So that entire chain worked better than expected than we thought coming into the year itself. So that was really healthy.

Thomas L. Deitrich: What allowed that catch up to go a little bit faster than we had originally.

Thomas L. Deitrich: Anticipated in Q1 for example is better component supply factories running at.

Thomas L. Deitrich: A good clip all the way through the process to get logistics work done to ship products and.

Thomas L. Deitrich: Complete field installation, which allows us to recognize revenue so that entire chain worked better than expected.

Thomas L. Deitrich: Then what we thought coming into the year itself. So that was really healthy we see supply chain.

Thomas L. Deitrich: Is continuing to be healthy reliability of inbound components is strong and steady lead times are still a little bit longer than pre pandemic levels.

Thomas L. Deitrich: We see the supply chain as continuing to be healthy; reliability of inbound components is strong and steady. Lead times are still a little bit longer than pre-pandemic levels, but starting to retract slightly in pockets here and there. So we view the overall supply chain all the way out through field installation as healthy and constructive for the business.

Thomas L. Deitrich: But starting to retract slightly in pockets here and there. So we view the overall supply chain all the way out through field installation is healthy and constructive for the business.

Thomas L. Deitrich: You mentioned data center demand, which is just about the hottest topic on the planet right now, as one of the vectors or the influencing factors around the utility customer base. And certainly, we see that in a lot of the public dialogue that those utilities are having right now. Where do you see Itron within the ecosystem of, you know, enabling providers for data centers? You know, you're talking about low growth, but you're talking about low growth in very sort of specific concentrated pockets with very high reliability. Yeah, but how does Icon fit in with that?

Speaker Change: Very clear and helpful. Tom Thanks, you.

Thomas L. Deitrich: You mentioned.

Thomas L. Deitrich: Data center demand, which is.

Thomas L. Deitrich: It's about the hottest topic on the planet right now.

Thomas L. Deitrich: As one of the vectors are.

Thomas L. Deitrich: The influencing factors around utility customer base, and certainly we see that in.

Thomas L. Deitrich: Lot of the public dialogue, because utilities are having right now.

Thomas L. Deitrich: What do you see I tron within the ecosystem of enabling providers for data center, and you're talking about low growth, but youre talking about load growth and very sort of specific concentrated pockets with very high reliability demands.

Thomas L. Deitrich: And what kind of conversations and solutions are you discussing with your customer? Sure. So data centers are clearly growing, as you've referenced. Those are enormous loads, and they're sitting in one spot. So from a utility planning perspective, they've got to put a lot of power into that one location. How do you do that?

Thomas L. Deitrich: How does <unk> fit in that and what kind of conversations and solutions are you discussing with the customers around it.

Thomas L. Deitrich: Sure. So data center is clearly growing.

Thomas L. Deitrich: You've referenced.

Thomas L. Deitrich: That those are enormous loads and they are they're sitting in one spot. So from a utility planning perspective, they've got to put a lot of power into that one location.

Thomas L. Deitrich: How do you do that you certainly have problems with getting enough generation and transmission in place to be able to do that and in the Meanwhile, as that is still waiting to happen and demand load growth is progressing you've got to find a way to make do with what you have and that's where we come in to ring.

Thomas L. Deitrich: You certainly have problems with getting enough generation and transmission in place to be able to do that. In the meantime, as that is still waiting to happen, and demand load growth is progressing, you've got to find a way to make do with what you have. And that's where we come in to wring out the efficiencies in the distribution channel, in the distribution network rather than work through that. So non-wireless alternatives to balance supply and demand to be able to get better efficiencies out of the distribution network are where we play. Non-wires alternatives are things that happen faster than building a new power plant or even a transmission line.

Thomas L. Deitrich: The efficiencies in the distribution channel and.

Thomas L. Deitrich: And the distribution network rather too.

Thomas L. Deitrich: Work through that so non wires alternatives to balance supply and demand to be able to get better efficiencies out of the distribution network is where we play non wires alternatives.

Thomas L. Deitrich: Are things that happen faster than building, a new power plant or even a transmission line.

Thomas L. Deitrich: And that nimble nature is really what's allowing utilities to deal with increased loads broadly, whether it comes from transportation or electrification in the home or massive things like data centers. It is making the distribution network work better. That efficiency gain is where we've got a big role to play, and we see a lot of traction in customer conversations already today. Thank you. Thank you. And our next question coming from the lineup, Pavel Molchanov with Women's Games Zealand, is open.

Pavel S. Molchanov: And that nimble nature is really whats, allowing utilities to deal with increased loads broadly whether it comes from transportation or electrification in the home or massive things like data center. It is making the distribution network work better that efficiency gain is where we've got a big role to play and we see a lot.

Pavel S. Molchanov: Lot of traction with that.

Pavel S. Molchanov: With customer conversations already today.

Thomas L. Deitrich: Okay.

Pavel S. Molchanov: Excellent. Thank you.

Thomas L. Deitrich: Yeah.

Pavel S. Molchanov: Thank you.

Pavel S. Molchanov: And our next question coming from the line of April Mark Smith with Raymond James Your line is now open.

Pavel S. Molchanov: Thanks for taking the question.

Pavel S. Molchanov: Thanks for taking the question. Let me actually follow up on the data center from earlier. Is this going to show up in outcomes? Or will there be incremental demand in Network as well? It shows up in both of those segments.

Pavel S. Molchanov: Let me actually follow up on on the data center from from earlier.

Pavel S. Molchanov: Is this going to show up in outcomes or will there be incremental demand in <unk>.

Pavel S. Molchanov: Network as well.

Thomas L. Deitrich: For us, depending on the individual customer deployment, you've got to create visibility into your distribution network to be able to enable that balancing of supply and demand on a local level. So generally, there's a networking component that goes along with that to get the communications channels in place. And then in order to be able to enact changes in demand response kinds of programs or balance supply and demand or understand what's happening in the distribution grid, that's usually software-oriented, and that accrues to the outcomes business.

Pavel S. Molchanov: It shows up in both of those segments for us.

Thomas L. Deitrich: Depending on the individual customer deployment.

Thomas L. Deitrich: <unk> got to create visibility into your distribution network to be able to enable.

Thomas L. Deitrich: That balancing of supply and demand on a local level. So generally theres a networking component that goes along with that to get that communications channels in place and then in order to be able to enact changes in demand response kinds of programs or balancing supply and demand are understanding what's happening in the distribution grid.

Thomas L. Deitrich: That's usually.

Thomas L. Deitrich: Software oriented and that accrues to the outcomes business. So.

Thomas L. Deitrich: So it shows up in both of the segments that we've been investing in, and it just plays to the longer-term strategy that we've been working towards. Okay, um, let me also follow up on outcomes. This quarter, specifically, you referenced that networked revenue was at a record level. Results, you know, were up year over year, but, You know, not quite at a record level. Do you see those two line items kind of syncing up in terms of growth directionally, or are they disconnecting in some way? Well, in the networks numbers that we talked about, there clearly was that catch-up phenomenon, which drove the percentage up much faster than what you saw in the outcome segment.

Thomas L. Deitrich: It shows up in both of the segments that we've been investing in it just plays to what the longer term strategy that we've been working towards.

Thomas L. Deitrich: Okay.

Thomas L. Deitrich: Let me also follow up on outcomes. This quarter, specifically you referenced that network revenue was at a record.

Thomas L. Deitrich: Outcomes why was up year over year, but.

Thomas L. Deitrich: Not quite at record levels.

Thomas L. Deitrich: Do you see those two line items kind of sinking up in terms of growth directionally or are they disconnecting in some sense.

Thomas L. Deitrich: The outcome segment is generally routable recurring revenue, which just layers in on top of each other. So, longer term, the percentage growth rate of the outcomes business clearly will outstrip networks as we're going through this short-term catch up on revenue from component constraints from years past. Clearly, network is outgrowing the outcome segment in the near term, but longer term, that obviously more and more accrues to the outcomes business. Okay, makes sense.

Thomas L. Deitrich: Well in the networks numbers that we talked about there clearly was that catch up phenomenon, which drove the percentage up much faster than.

Thomas L. Deitrich: And then what you saw in the outcomes segment. The outcomes segment is generally.

Thomas L. Deitrich: A ratable recurring revenue, which just layers in on top of each other so longer term the percentage growth rate of the outcomes business clearly will outstrip networks as we're going through this short term.

Thomas L. Deitrich: Catch up on revenue from component constraints from years past.

Thomas L. Deitrich: Network is outgrowing.

Thomas L. Deitrich: The outcome segment in the near term, but longer term that obviously more and more accrues to.

Thomas L. Deitrich: To the outcomes business.

Speaker Change: Okay makes sense. Thank you.

Thomas L. Deitrich: <unk>.

Pavel S. Molchanov: Thank you. Thank you. And our next question coming from the lineup, Jeff Osborne with TD Cowen. Your line is open. Hey, good morning, Tom.

Thomas L. Deitrich: Thank you and our next question coming from the line of Jeff Osborne with Cowen Your line is open.

Jeffrey David Osborne: I had a question on the networking side as well, with the Elpis acquisition and then going back to Distributech with the Schneider ADMS integration. Can you just walk us through, as you're adding more software, how that potentially might drive more NIC card sales for the networking piece? Is there a way to frame what those two announcements mean in terms of adding networking intelligence to things like transformer substations and other assets? Sure.

Jeffrey David Osborne: Hey, Good morning, Tom and then a question on the networking side as well with the Opus acquisition, and then going back to distribute tech with the Schneider.

Jeffrey David Osborne: Ams integration can you just walk us through as Youre, adding more software.

Jeffrey David Osborne: Potentially might drive more Nic card sales.

Jeffrey David Osborne: The networking piece is there a way to frame what those two announcements.

Jeffrey David Osborne: In terms of adding networking intelligence with things like transformer substations and other assets.

Thomas L. Deitrich: It's kind of a similar question to the previous one in terms of how to think about it overall. What our GreenEdge Intelligence Platform does is provide visibility of what's out there in your distribution network. And in order to be able to provide that visibility, you need connectivity to the asset. And, okay, the asset could be an EV charger. It could be a line sensor.

Jeffrey David Osborne: Sure.

Jeffrey David Osborne: It's kind of a similar question to the prior in terms of how to think about it overall.

Thomas L. Deitrich: It could be a house. It could be a smart panel. There are many, many different types of assets that you might want to keep track of and have visibility on. And every time you add that connectivity, that adds to the networking business. When you want to do something with that connectivity, meaning, okay, I want to take action, I want to turn something on or off based on that visibility, that is something that generally goes to the outcomes business.

Thomas L. Deitrich: What our grid edge intelligence platform does is provides visibility of what's out there in your distribution network.

Thomas L. Deitrich: And in order to be able to provide that visibility you need connectivity to the asset and the asset could be.

Thomas L. Deitrich: And EV charger it could be a <unk> sensor it could be a house.

Thomas L. Deitrich: It could be a smart panel.

Thomas L. Deitrich: There are many many different types of assets that you might want to add to keep track of and have the visibility on.

Thomas L. Deitrich: And every time, you add that connectivity that accrues to the networking business when you want to do something with that connectivity.

Thomas L. Deitrich: Meaning okay, I want to take action I want to turn something on or off based on that visibility.

Thomas L. Deitrich: <unk> is something that generally accrues to the outcomes business.

Thomas L. Deitrich: So, when we do things like power flow analysis or grid planning so a utility can understand where it is appropriate for them to hook up a distributed energy resource, or allow you to interconnect your rooftop solar, for example, that is a combination of networks and outcomes for our business. But it fits into that entire GreenEdge Intelligence Platform.

Thomas L. Deitrich: So when we do things like power flow analysis or.

Thomas L. Deitrich: Or grid planning, so utility could understand where it is appropriate for them to to hook up a distributed energy resource. So allow you to interconnect youre rooftop solar for example.

Thomas L. Deitrich: That is a combination of networks and outcomes for our business, but fits into that entire grid edge intelligence platform.

Jeffrey David Osborne: Got it. That's helpful. And then I've asked you this on prior calls, but everything in the recorded results was phenomenal, other than the bookings number, which you said was in line with expected seasonality. Just getting some investor questions as it relates to the full year visibility. So, is there a way you can frame or confirm, I assume you've been technically awarded enough volume to be booked to bill above one for the year, and you're just waiting on regulatory approval? Or are there still some awards that you need to receive notification that you've been technically chosen?

Speaker Change: Got it that's helpful and then.

Jeffrey David Osborne: I've asked you this on prior calls but.

Jeffrey David Osborne: Everything on the recorded results were phenomenal other than the bookings number which you said was in line with expected seasonality just hitting some investor questions as it relates to the full year visibility is there a way you can frame or confirm I assume you had been technically awarded.

Jeffrey David Osborne: Enough volume to be book to Bill above one for the year, you're just waiting on regulatory approval or is there still some awards that you need to receive notification that <unk> been technically chosen.

Thomas L. Deitrich: Yeah, I certainly just frame up one quarter of the booking so that there's no mystery there. It was in the range we were expecting. Q1 is generally seasonally low; no change in the full year outlook based on the Q1 results. A rich pipeline of opportunities for all the reasons we were talking about. In order for us to put something in backlog and declare it a booking, we obviously need the award, we need the signed customer contract, and, of course, regulatory approval.

Speaker Change: Yeah, certainly, yes, just frame up one quarter bookings so that Theres no mystery. There. It was in the range. We were expecting in Q1 is generally seasonally low no change in the full year outlook.

Thomas L. Deitrich: Based on the Q1 results rich pipeline of opportunities for all the reasons, we were talking about.

Thomas L. Deitrich: In order for us to put something into backlog and declared a booking we obviously need the award we need.

Thomas L. Deitrich: Signed customer contract and of course regulatory approval. There is a larger number of deals that are in that governmental and regulatory approval.

Thomas L. Deitrich: There is a larger number of deals that are in the governmental and regulatory approval portion of the process, which is typical. And that still gives us a good view for the year overall, but it's always a bit lumpy.

Thomas L. Deitrich: <unk> of the process that is typical and thats, what still gives us a good view for the year overall, but.

Thomas L. Deitrich: And indeed, you got kind of a low point in Q1. But we're still feeling like we're on track for the full year. There are several hundred million dollars of bookings that are past the award and through that contracting and regulatory governmental approval process. So we're feeling good about it. Excellent. That's all I have.

Thomas L. Deitrich: It's always a bit lumpy and indeed.

Thomas L. Deitrich: <unk> got kind of a low point in Q1, but we're still feeling.

Thomas L. Deitrich: Like we're on track for the full year.

Thomas L. Deitrich: There are several hundred million dollars.

Thomas L. Deitrich: Bookings that are better.

Thomas L. Deitrich: Has the award and through that contracting and.

Thomas L. Deitrich: Regulatory and governmental approval process. So we're feeling good about it.

Thomas L. Deitrich: Excellent that's all I had thank you.

Thomas L. Deitrich: Yeah.

Speaker Change: Thank you.

Chip Moore: Thank you. Thank you. One moment for our next question, and our next question comes from the line of Chip Moore with ROTMKM: your line is open. Chip Moore, your line is open.

Speaker Change: Our next question.

Chip Moore: Next question coming from the line of Chip Moore with Rod M. Cam. Your line is now open.

Chip Moore: Your line is open.

Chip Moore: Maybe we can skip this, and, ah, now we have you. Very good. Go for it.

Chip Moore: Maybe skip it.

Chip Moore: Gotcha very good okay apologies.

Chip Moore: OK, apologies. So, hey, thanks for taking the question. I wanted to ask about the outlook. You know, just looking at Q2 expectations, I think it implies maybe more subdued growth in the back half. Obviously, you know, you'll be lapping some tougher comps, and I assume you'll wait for Q2 to make any updates to the full-year outlook. But any way to think about sort of high-level expectations in the second half based on your current visibility? Yeah, this is Joan.

Joan: Hey, Thanks for taking the question Tom I wanted to ask about the outlook.

Chip Moore: Looking at Q2 expectations I think implies maybe more subdued growth in the back half, obviously, you'll be lapping some tougher comps and I assume you'll wait for Q2 to make any updates to the full year outlook.

Joan: Any way to think sort of high level expectations in the second half based on your current visibility.

Joan S. Hooper: I'll take that one, Chip. I would say, you know, stay tuned for August. At this point, when we started the year and gave the full year guidance, our expectations for the second half, I think are still pretty consistent with that view. We'll see how Q2 goes. And the timing, as Tom mentioned, the bookings can affect quarter to quarter when it comes to rolling off the backlog. But at this point, there really is no change to our expectations for the second half.

Chip Moore: Yes. This is John I'll take that one chip I would say stay tuned for August at this point when we started the year and gave the full year guidance on our expectations for the second half I think are still pretty consistent with that view, we will see how Q2 goes in and the timing as Tom mentioned in bookings can can affect quarter to quarter when it when it comes from rolling off backlog, but at this.

Joan S. Hooper: Really no change to our expectations to the second half.

Joan S. Hooper: Understood. Thanks. Thanks, Joan.

Speaker Change: Understood. Thanks, Thanks, Jonathan maybe my follow up just on outcomes in the quarter on the margins I think you called out some mix within service costs, but anything there or is it sort of.

Joan S. Hooper: Our largest software project.

Speaker Change: Didn't materialize or anything like that thanks.

Chip Moore: And maybe my follow-up, just just on outcomes in the quarter on the margins, I think you called out, you know, some mix and service costs, but anything there, is it, you know, sort of a larger software project that didn't didn't materialize or anything like that? Thanks. No, no, as we've talked in the past, outcomes is still really a subscale business for us. So you will get variability from quarter to quarter, depending on the proportion of software licenses that are in that particular quarter.

Joan S. Hooper: No as we've talked in the past outcomes is still it's still really a subscale business for us. So you will get variability from quarter to quarter, depending on the proportion of software licenses is in that particular quarter. So as we mentioned there was a lot of recurring services in an era in which tends to be a little bit lower margin, but nothing fundamentally different in our view of warehouse.

Chip Moore: Homes can continue to scale and grow its margins.

Chip Moore: So, as you mentioned, there were a lot of recurring services in there, which tends to be a little bit lower margin, but nothing fundamentally different in our view of where outcomes can continue to scale and grow its margins. Excellent. Thank you very much.

Speaker Change: Excellent. Thank you very much.

Speaker Change: Thank you.

Joan S. Hooper: Thanks. And our next question, coming from the line of Davis Sunderland with Bear Dealing, is open. Hey, good morning, team.

Speaker Change: And our next question coming from the lineup.

Davis Sunderland: David <unk> with Baird. Your line is open.

Davis Sunderland: Thanks for your time. Thanks for taking my question. I wanted to first ask about devices and the strong gross margins there. I know part of this is due to mix and partly costs. I'm just wondering if you could maybe break out a bit more detail as to the contribution from each of these and what's assumed for the rest of the year on that front. And then there's a follow-up.

Davis Sunderland: Hey, good morning team. Thanks for the time, thanks for taking my question.

Davis Sunderland: I wanted to first ask about devices and the strong gross margins. There I know part of this is due to mix and partly costs I'm. Just wondering if you could maybe break out a bit more detail as to the contribution from each of us and what's assumed for the rest of the year on that front and then I have a follow up.

Joan S. Hooper: Yeah, so again, we mentioned in the prepared remarks, and it's been consistent for the last several quarters, we've had a really favorable mix of water sales in Europe, which tend to have a higher margin than some of the other products that we sell. So we saw a continuation of that, not quite as high in Q1 as it was in Q4. But we will continue, I think, to see strong water sales. And, obviously, they've spent a lot of time in the last couple years just pruning the portfolio.

Speaker Change: Yes, So again, we mentioned in the prepared remarks, and it's been consistent the last several quarters, we've had a really favorable mix.

Joan S. Hooper: Water sales in Europe, which tend to be a higher margin than some of the other products that we sell so we saw a continuation of that and that is quite high in Q1 as it was in Q4, but.

Joan S. Hooper: We will continue I think to see strong water sales and obviously they've spent a lot of time in the last couple of years, just pruning the portfolio and as we get the factories loaded and we continue this year to close one factory that is primarily a devices factory that's kind of all built in our expectations. So while we don't give.

Davis Sunderland: And, you know, as we get the factories loaded, and we continue this year to close one factory that's primarily a device factory, that's kind of all built into our expectations. So while we don't give overall guidance by segment, you know, as we said last quarter, we sort of expect for the year's outcomes to be kind of flattish on the top line and continue to improve its margin over time to reach the aspirational targets that we communicated to investors. Got it, that's helpful. And then maybe that's actually a good segue.

Davis Sunderland: Overall guidance by segment as we said last quarter, we sort of expect for the year outcomes to be kind of flattish on the top line and continue to improve its margin over time to reach the aspirational targets that we communicated at Investor day.

Thomas L. Deitrich: Could you just talk about new market opportunities, anything you're seeing, maybe specifically in Europe or elsewhere as it relates to water or any other new products? And then again, just what's embedded in the guide or what your assumptions are as it relates to that? Thank you.

Davis Sunderland: Got it that's helpful. And then maybe that's actually a good segway could you just talk about new market opportunities anything youre seeing maybe specifically in Europe or elsewhere as it relates to water or any of the new products and then again just what's embedded in the guide or what your assumptions are as it relates to that thank you.

Thomas L. Deitrich: We see good growth opportunities with that grid edge intelligence platform, as we talked about, which eventually ends up in both networks and outcomes segments for us. What's fueling that growth? It really is the automation of infrastructure. It's creating better visibility into the distribution network so that you can cope with rising demand and low variability. Things like hooking up an EV to the grid create an enormous variable load at a local spot.

Speaker Change: Sure I can take that one we see good growth opportunities.

Thomas L. Deitrich: With that grid edge intelligence platform as we talked about which eventually ends up in both the.

Thomas L. Deitrich: Networks and outcomes segments for us, what's fueling that growth. It really is the automation of infrastructure, it's creating better visibility into the.

Thomas L. Deitrich: The distribution network. So that you can cope with rising demand and load variability things like.

Thomas L. Deitrich: Hooking up an EV to the grid it creates an enormous variable load at a local spot so in order to be able to cope with that and ensure resiliency and reliability you want to invest in your distribution grid.

Thomas L. Deitrich: So, in order to be able to cope with that and ensure resiliency and reliability, you want to invest in your distribution grid. As more generation and more transmission, it takes a bit longer to come by investing in non-wires alternatives to bring out efficiencies in your existing network drives growth. In the water and gas space, it is automation of the basics.

Thomas L. Deitrich: As more generation and more transmission is it takes a bit longer to come by.

Thomas L. Deitrich: Vesting and non wires alternatives to wring out efficiencies in your existing network drives growth in the water and gas space. It is automation of the basics its digitalization of that infrastructure drives growth and then finally.

Thomas L. Deitrich: It's the digitalization of that infrastructure that drives growth. And then, finally, there are good pockets of growth with some of the things we do in smart cities. So, automating lighting infrastructure inside of cities is an area that we see continued growth in. A smaller business for us, but it's a good pocket. Those are the things that drive overall business growth and generally are accruing to the networks and outcomes business, where we clearly have growth aspirations, as we laid out in the recent investor day. That's helpful.

Thomas L. Deitrich: There's good pockets of growth with.

Thomas L. Deitrich: Some of the things we do in smart cities.

Thomas L. Deitrich: So while automating lighting infrastructure inside of cities is an area that we see.

Thomas L. Deitrich: Continued growth smaller business for us, but it's a good pocket those are the things that drive the overall business growth and generally are accruing to the networks and outcomes business, where we clearly have.

Thomas L. Deitrich: Growth aspiration, because we laid out in the recent Investor day.

Speaker Change: That's helpful. Thank you.

Davis Sunderland: Thank you. Thank you. And as a reminder, to ask a question, please press star 11.

Speaker Change: Thank you.

Thomas L. Deitrich: And as a reminder to ask a question. Please press star one one.

Kasope Oladipo Harrison: Our next question coming from the line of Kashi Harrison with Piper Sandler, your line is open. Good morning, all, and thanks for taking my questions. So, just, you know, picking up on a few earlier questions, you know, the load growth expectations do keep rising, most recently with the bigger crud update. I know, you know, the benefit may not be necessarily direct, since a lot of this is from very large loads, but I was just wondering, is there a simplistic way we can think about, you know, some of the U.S. load growth expectations that underpin the long-term 4 to 6 percent forecast from the investor day, and then, you know, maybe some sort of sensitivity on, you know, what all these, you know, what all these changes in demand expectations could mean for your forecast?

Davis Sunderland: Next question coming from the line of <unk> Harrison with Piper Sandler Your line is now open.

Kasope Oladipo Harrison: Good morning, all and thanks for taking my questions.

Kasope Oladipo Harrison: So just picking up on a few earlier questions.

Kasope Oladipo Harrison: Growth expectation to keep rising most recently with the bigger caught update.

Kasope Oladipo Harrison: No the benefit may not be necessarily directly a lot of business from very large loads, but.

Kasope Oladipo Harrison: I was just wondering a very simplistic way, we can think about some of the U S load growth expectation that underpin the long term, 4% to 6% forecast from the Investor Day, and then maybe some sort of sensitivity on on what all of these.

Kasope Oladipo Harrison: What all these changes in demand expectations could mean for your forecast.

Kasope Oladipo Harrison: So difficult to try to correlate it because there's a pretty wide gap between an overall demand forecast and what it looks like on a regional level for us. But if total electricity consumption for the U.S. was kind of flattish for, I don't know, 20 years from maybe 2000 to 2020, it starts to grow. And you're talking single-digit growth, either low single-digits, or some folks are talking about much higher percentage growth rates on electricity overall using the U.S. as an example. How do you think you can manage that?

Kasope Oladipo Harrison: So difficult to try to correlate it because there's a pretty wide gap between overall demand forecast and what it looks like on a regional level for us but.

Kasope Oladipo Harrison: If total electricity consumption for the U S was kind of flattish for.

Kasope Oladipo Harrison: 20 years from maybe 2000 to 2020, it starts to grow and you're talking single digit growth.

Kasope Oladipo Harrison: Either low single digits or some folks are talking about much higher percentage growth rates on electricity overall using the U S. As an example.

Kasope Oladipo Harrison: How do you how can you manage that it really does come down to you need more generation you need more transmission and youre going to have to invest pretty dramatically from.

Thomas L. Deitrich: It really does come down to you need more generation, you need more transmission, and you're going to have to invest pretty dramatically in a distribution network, which is where we play. So we think we're looking at low single digits to mid single digits in terms of total electricity growth. That's aligned to what most analysts are expecting, and that is what is underneath our investor day longer-term targets for growth. If for some reason it were to go faster, that clearly would be a tailwind for our business. But it's that low to mid single-digit overall electricity growth which is part of our underlying thesis for business growth. That's a very helpful context sentence.

Thomas L. Deitrich: Distribution network, which is where we play so we think we're looking at low single digits to mid single digits in terms of total electricity growth that's aligned to what most analysts are expecting and that is what is underneath our.

Thomas L. Deitrich: Investor day longer term targets for for growth if for some reason it where to go faster that clearly would be a tailwind for our business, but it's that low to mid single digit overall electricity growth, which is part of our underlying thesis for for business growth.

Kasope Oladipo Harrison: I appreciate it. And then the revenue outperformance in Q1 and then, to some extent, Q2, is there a way to think about how much of this is backlog pull forward versus incremental book and ship business? Just trying to think through if you outperform this year, you could end up pulling some revenues from 2025 and maybe perhaps impact how we should be thinking about year-on-year growth. Well, again, I'd say we entered the year assuming that we had about 125 million of that previously supply-constrained revenue.

Speaker Change: That's very helpful context, I appreciate it.

Kasope Oladipo Harrison: And then but the revenue outperformance in.

Kasope Oladipo Harrison: In Q1, and then I guess Q2 to some extent.

Kasope Oladipo Harrison: Is there a way to think about how much of this is backlog pull forward versus incremental book and ship business.

Kasope Oladipo Harrison: Just trying to think through if you outperform this year.

Kasope Oladipo Harrison: It could end up pulling some revenues from 2025 and maybe perhaps.

Kasope Oladipo Harrison: It impacts how we should be thinking about year on year growth.

Kasope Oladipo Harrison: When we initially did Q1 guidance, we were sort of thinking, you know, half in Q1, half in Q2. In reality, it was more like 85 million in Q1 and 40 in Q2. So part of it, when you look at the guidance we gave for the second quarter, it's kind of flat sequentially. And that's really the reason why. So that's probably the best color I can get.

Kasope Oladipo Harrison: Well again I would say we entered the year, assuming that we had about $125 million of that previously supply constrained revenue. When we initially did Q1 guidance, we were sort of thinking happened Q1 half in Q2.

Kasope Oladipo Harrison: In reality it was more like $85 million in Q1 and 40 in Q2, so part of it when you look at the guidance, we gave for second quarter, its kind of flat sequentially and Thats really the reason why.

Kasope Oladipo Harrison: Again, second half of the year for now, you know, I think where you guys settled out based on our original four-year guidance for the second half is probably the right level at this point. Helpful, thanks. And maybe just one more, if I may, you know, you shared some color earlier on on the margins from the outcome segment, but I was wondering if we could talk a little bit about network solutions, very robust at, I want to say 37%. What, what, what were the drivers there?

Kasope Oladipo Harrison: So that's probably the best color I can again second half of the year for now I think I think where you guys settled out based on our original full year guidance for the second half is probably the.

Kasope Oladipo Harrison: The rate level at this point.

Kasope Oladipo Harrison: Helpful. Thanks, and maybe just one more if I may.

Kasope Oladipo Harrison: You shared some color earlier on the margins from the outcomes segment, but I was wondering if you could talk a little bit about network solution.

Kasope Oladipo Harrison: Very robust.

Kasope Oladipo Harrison: Want to say, 37%.

Kasope Oladipo Harrison: What what what were the drivers there and how sustainable are these margins through b through the rest of the year.

Kasope Oladipo Harrison: And how sustainable are these margins through the rest of the year? Yeah, the network's Q1 margin was unusually high, I would say. So that's the primary reason the margins were so high.

Kasope Oladipo Harrison: Yes. The networks Q1 margin was unusually rich I would say so that's the primary reason the margins were so high. So if you looked at our Investor day targets essentially network hit it in Q1 at 37%. So I don't I don't think it's sustainable in the near term I think that's still the right longer term target for them and if again if.

Joan S. Hooper: So if you looked at our investor day targets, you know, essentially, networks hit them in Q1 at 37%. So I don't, I don't think it's sustainable in the near term. I think that's still the right longer-term target for them. And again, again, if you look at the Q2 guidance we provided from an earnings perspective, it's lower than Q1 on the same revenue. And that phenomenon is primarily related to our assumption that networks margins will not be as strong in Q2 as they were in Q1. Got it.

Joan S. Hooper: You look at.

Joan S. Hooper: The Q2 guidance, we provided from an earnings perspective, it's lower than Q1 on the same revenue and that phenomenon is primarily related to our assumption that networks margins will not be as strong in Q2 as they were in Q1.

Joan S. Hooper: Yeah.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Kasope Oladipo Harrison: And our next question, coming from the line of Joseph Osha with Guggenheim Partners, Ceylon is open. Hi there, thanks for taking my call. I have two more strategic questions. First, I was wondering if you could maybe talk a little bit more about the opportunities you see for digitizing the water metering infrastructure. Living here in California, that seems to be something that's coming up a lot.

Speaker Change: And our next question coming from the line of.

Kasope Oladipo Harrison: Joseph Osha with Guggenheim Partners. Your line is open.

Joseph Amil Osha: Hi, there thanks for taking my call I have two more strategic questions. First I was wondering if you could maybe talk a little bit more about the opportunities you see for digitization of the water metering infrastructure living here in California.

Joseph Amil Osha: It seems to be something that's coming up a lot and then I have one other question.

Joseph Amil Osha: And then I have one other question. Sure. The majority of water systems around the globe are generally mechanical in nature at this point.

Kasope Oladipo Harrison: Sure.

Joseph Amil Osha: The majority of our water systems are around the globe are generally mechanical in nature to this point and.

Thomas L. Deitrich: And I would say that sometimes there are manual reads; sometimes there are walk-by or drive-by reads. But moving that to be a digitized infrastructure where you can get two-way communication to the meter itself clearly is a big productivity opportunity for utilities around the globe. You wouldn't need to drive around the neighborhood.

Thomas L. Deitrich: I would say that.

Thomas L. Deitrich: Sometimes there are manual read sometimes there are walk by or drive by reads, but moving that to be a digitized infrastructure, where you can get two way communication to the to the meter itself.

Thomas L. Deitrich: Clearly is a big productivity opportunity for.

Thomas L. Deitrich: Utilities around the globe, you wouldn't need to drive around the neighborhood you can get all the data from behind a pane of glass and be able to create more accurate billing for your customers. So that's one sort of basic trend once you have that infrastructure in place.

Thomas L. Deitrich: You can get all the data from behind a pane of glass and be able to create more accurate billing for your customers. So that's one sort of basic trend. Once you have that infrastructure in place, now that you have access to much richer sets of data, you can be looking at what's happening on an ongoing basis at regular intervals, and you can understand what's happening within your water infrastructure. Do you have a leak in a pipe somewhere? Is the homeowner got a leak inside of the house?

Thomas L. Deitrich: Now because you have access to much richer sets of data you can be looking at what's happening on an ongoing basis.

Thomas L. Deitrich: At regular intervals and you could understand whats happening within your water infrastructure.

Thomas L. Deitrich: Do you have a leak.

Thomas L. Deitrich: In a pipe somewhere is the homeowner who got a leak inside of the house and you can start to add value added services on top of that to reduce losses.

Thomas L. Deitrich: And you can start to add value-added services on top of that to reduce losses and create a better consumer engagement. It is that progression all the way from just letting's automate the basics all the way up to a tighter relationship with the consumer and the reduction of losses in scarce environments. That's what fuels the digitization of the water infrastructure. It's that trend which we see playing out on a global level. And I guess just is this something that could begin to become material for you? Because, as you point out, it's all mechanical, it's all pits in front of the fronts of yards, but you've got really quite meaningful efforts at the municipal level to bring water usage under control.

Thomas L. Deitrich: And create a better consumer engagement. It is that progression all the way from just let's automate the basics all the way up to a tighter relationship with the consumer and the.

Thomas L. Deitrich: Reduction of losses and scarce environments.

Thomas L. Deitrich: That's what fuels that digitization of the water infrastructure is that trend, which we see playing out on a on a global level.

Thomas L. Deitrich: And I guess is this.

Thomas L. Deitrich: It's something that could begin to become material for you because as you pointed out it's all mechanical it's all pitch in front its fronts, but.

Thomas L. Deitrich: But you've got really quite meaningful efforts that the municipal level to bring water usage under control I mean, so is this something we could wake up in a year or 18 months and discover as a much more material opportunity for you relative to the other things you're doing.

Joseph Amil Osha: I mean, is this something we could wake up in a year or 18 months and discover is a much more material opportunity for you relative to the other things you're doing? I mean, I still think there's probably bigger growth as a percentage in the electricity space for a lot of the macro trends that we talked about earlier in this call, but that doesn't take anything away from water growth.

Thomas L. Deitrich: There's still growth in that area as well. So we see both growing as a percentage, but probably electricity is a little bit faster. Our water business today is a meaningful portion of the company. We've talked about it for three, four quarters running now, and it's running a bit ahead of expectations. And it's still a big part of what we do.

Joseph Amil Osha: I mean, I still think there is probably bigger growth as a percentage in the electricity space for a lot of the macro trends that we talked about earlier in this call.

Thomas L. Deitrich: That doesn't take anything away from from water growth there is still growth in that area as well so we see both growing.

Thomas L. Deitrich: As a percentage, but probably electricity is a little bit faster our water business today is a meaningful portion of the company we've talked about it for three or four quarters running now is running a bit ahead of expectations.

Thomas L. Deitrich: So I don't know, maybe 20-25% of total revenue is coming through that space. Okay, thank you. And then the second strategic question, you know, looking at this helps us deal with the many things you said about, you know, helping your utility customers have better visibility into the local distribution grid, you know, makes great makes great sense. It's awesome.

Thomas L. Deitrich: It's still a big part of what we do so I don't know maybe 2025% of total revenue is coming through that space.

Joseph Amil Osha: I agree with you. Um, one of the things that your people talk about is the potential to sort of take that next step and begin to work with utilities and homeowners on controlling, you know, behind the meter loads, right? So, SPAN, which I'm sure you're familiar with, has done a deal with Landis McGeer.

Speaker Change: Okay. Thank you and then second strategic question you are looking at this help us deal.

Speaker Change: Thank you said about helping your utility customers have better visibility into the local distribution grid make great makes great sense. It's also my I agree with you.

Joseph Amil Osha: One of the things that people talk about is the potential to sort of take that next step and begin to work with utilities in homeowners on controlling behind the meter loads right, so span, which I'm sure you're familiar with has done a deal with <unk> this year.

Joseph Amil Osha: I'm just wondering if we could see part of your acquisition strategy in the coming year to begin to focus not just on this grid but local visibility for utilities but also beginning to face off against customers behind the meter and address this other potential part of the challenge, which is low control. Certainly, we believe that the growth in distributed energy resources in front of and behind the meter on the side of the house is going to continue to grow dramatically. That's just what is going to happen. I don't see any way that it would not.

Joseph Amil Osha: I'm just wondering is could we see part of your acquisition strategy in the coming year or two begin to focus not just on this grid.

Joseph Amil Osha: Visibility for utilities, but also beginning to face off against customers behind the meter and address this other other potential part of the challenge, which is look load control.

Thomas L. Deitrich: How do you control and optimize the use of all of those assets? That's where I think we've got a really unique and interesting value proposition. So, when you start to think about things like demand response, where we have the IntelliSource platform that allows the thermostat inside someone's house to be adjusted to manage the load and shed load in a difficult situation, having hundreds of megawatts under that platform of control, we expect that business to grow, and we think it's going to become more and more of a fine-grain capability.

Joseph Amil Osha: Certainly we believe that the growth in distributed energy resources in front of and behind.

Thomas L. Deitrich: The meter on the side of the house is going to continue to grow dramatically.

Thomas L. Deitrich: Thats just going to happen.

Thomas L. Deitrich: I don't see any way that it would not how do you control and optimize the use of all of those assets is where I think we've got a really unique and interesting value proposition. So when you start to think about things like demand response, where we have entellus source platform that allows the.

Thomas L. Deitrich: The thermostat inside someone's house to be adjusted to manage load and shed low.

Thomas L. Deitrich: In a difficult situation having.

Thomas L. Deitrich: Having hundreds of megawatts under that platform of control, we expect that business to grow and we think it's going to become more and more fine grain capabilities. So helping the utilities cope with that helping consumers understand how they are utilizing an asset we're making those assets part of that.

Thomas L. Deitrich: So, helping the utilities cope with that, helping consumers understand how they are utilizing an asset or making those assets part of the larger macro solution is clearly a growth area, which that grid edge intelligence platform that we've talked about is firmly targeted and well-advanced in terms of adding more and more capability.

Thomas L. Deitrich: The larger macro solution is clearly a growth area, which that grid edge intelligence platform that we've talked about is firmly targeted and well advanced in terms of adding more and more capability.

Thomas L. Deitrich: All right. Thank you very much. Thank you. And again, as a reminder, if you'd like to ask a question, please press star 11 on your telephone. And our next question comes from the line of Austin Muller with Canaccord. Your line is open. Hi, good morning, great quarter.

Speaker Change: Alright, Thank you very much.

Austin Nathan Moeller: Thank you.

Austin Nathan Moeller: And again as a reminder, if you'd like to ask a question. Please press star one on your telephone.

Austin Nathan Moeller: And our next question is coming from the line of similar with Canaccord. Your line is now open.

Austin Nathan Moeller: So just my first question here, how much of the backlog that was not an inflation index still needs to be shipped? And do you view that as more of a Q2 or second half expectation? The total backlog is still in the range of 70-30, meaning 70% is either new or repriced or at shorter-term pricing levels. There's still 30%, a little less, that is not repriced or not protected indexed in some way. That range hasn't materially changed over the last couple of months. We're still within a few percentage points of that.

Austin Nathan Moeller: Hi, good morning, Great quarter. So just my first question here, how much of the backlog that was not inflation index still needs to be shipped and do you view that as more of a Q2 or second half expectation.

Austin Nathan Moeller: The total backlog.

Austin Nathan Moeller: And the range of 70, 30, meaning 70% is either new or re priced or shorter term pricing levels, they're still 30% a little less debt is.

Austin Nathan Moeller: Not repriced are not protected indexed in some way.

Austin Nathan Moeller: That range Hasnt materially changed over the last couple of months, we're still within a few percentage points of that.

Thomas L. Deitrich: The majority of that 30% pre-priced, if you will, or not repriced backlog flows through in roughly the next year or two. So it's still going to trickle out over time itself, but we're continuing to eat through it overall. And it's part of the expectations that we are managing for the full year. Okay, and then just another question.

Austin Nathan Moeller: The majority of that 30% pre priced if you will or not.

Thomas L. Deitrich: Not repriced backlog flows through in roughly the next step a year or two so it's still going to trickle out over time itself, but we're continuing to eat through it overall, it's part of that.

Thomas L. Deitrich: Expectations that where we are managing for the full year.

Austin Nathan Moeller: Does your long-term guidance that was issued during the investor day factor in improved lead times for chips and other components in terms of being reduced further and getting closer to pre-pre COVID levels and enabling higher shipment turnaround? Or are you sort of expecting the same kind of lead times that you've been seeing recently? Yeah, we're running our business with roughly the lead times that we see today. Obviously, if they were to continue to improve, there's opportunity there to be a bit more responsive, but our outlook doesn't expect a meaningful change for the year.

Speaker Change: Okay and then just another question does your long term guidance that was issued during the Investor day factor in improved the lead times for chips and other components in terms of being reduced further and getting closer to pre COVID-19 levels and enabling higher shipment <unk>.

Austin Nathan Moeller: Around or are you sort of expecting the same kind of lead times that <unk> been seeing recently.

Austin Nathan Moeller: We're running our business with with roughly the lead times that we see today, obviously, if they were to continue to improve.

Austin Nathan Moeller: There's opportunity there to be a bit more responsive, but our outlook.

Austin Nathan Moeller: It doesn't expect a meaningful change for <unk>.

Austin Nathan Moeller: For the year, we're pleased with the level of <unk>.

Austin Nathan Moeller: Supply chain performance.

Austin Nathan Moeller: We're pleased with the level of supply chain performance that we're getting today. We are going to carry a little bit more inventory to manage anything that goes bump in the night in the year ahead, but it doesn't require a dramatic change in component lead times for us to continue to operate at the present level.

Austin Nathan Moeller: We're getting today, we are going to carry a little bit more inventory to manage.

Austin Nathan Moeller: Anything that goes bump in the night.

Austin Nathan Moeller: In the in the year ahead, but it doesn't require a dramatic change in component lead times for us too.

Austin Nathan Moeller: To operate at the present level.

Thomas L. Deitrich: Excellent. Thanks for the insights. Thank you. Thank you. And I'm showing no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Tom Dietrich for any closing remarks. Thank you very much for joining us on the call today. We look forward to updating you again in a few months for Q2. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, and you may now disconnect.

Speaker Change: Excellent thanks for the insights.

Speaker Change: Thank you.

Speaker Change: Thank you.

Thomas L. Deitrich: And I'm showing no further questions in the Q&A queue. At this time I will now turn the call back over to Mr. Tom Deitrich for any closing remarks.

Thomas L. Deitrich: Thank you very much for joining the call today, we look forward to updating you again in a few months for Q2.

Thomas L. Deitrich: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.