Landis+Gyr Group AG ((CH:LAND)) has held its Q4 earnings call. Read on for the main highlights of the call.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
The recent earnings call for Landis+Gyr Group AG presented a balanced sentiment, highlighting significant strategic progress and sustainability achievements. The company showcased impressive growth in order intake and backlog, yet faced challenges with declining revenue, inventory write-downs, and tariff-related issues. This mix of positive and negative elements resulted in a nuanced outlook for the company.
Record Order Intake and Backlog
Landis+Gyr reported a remarkable order intake of $2.6 billion, achieving a book-to-bill ratio of 1.5. The company also announced a record backlog of $4.6 billion, marking a 22.9% increase year-over-year. This strong performance underscores the company’s robust market position and strategic effectiveness.
Sustainability Achievements
The company made significant strides in sustainability, achieving 96% renewable electricity use across the Group. It also reduced Scope 1 and 2 emissions by over 60% since 2021 and achieved a 12% reduction in Scope 3 emissions per $100 of revenue, reflecting its commitment to environmental responsibility.
Strategic Focus on the Americas
The Americas region emerged as a key focus, accounting for 56% of revenue and the majority of profitability. Leadership changes and an upcoming U.S. listing highlight efforts to strengthen this region further, emphasizing its strategic importance to Landis+Gyr.
Software and Services Growth
Software and services are becoming increasingly integral to Landis+Gyr’s business model, with approximately 35% of the backlog being software-related. In the Americas, this figure is close to 50%, indicating a strategic pivot towards digital solutions.
Revenue Decline
Despite strong order intake, net revenue declined by 10.5% in constant currency. This was primarily due to the non-reoccurrence of pent-up demand realization in FY ’23 and tariff-related shipment delays, highlighting challenges in maintaining revenue growth.
Inventory Obsolescence
The company recorded a $20 million inventory obsolescence expense due to the rapid adoption of the Revelo platform, necessitating a write-down of components. This reflects the challenges associated with fast-paced technological advancements.
Tariff-Related Challenges
Tariff-related shipment delays in March resulted in approximately $30 million of revenue being deferred to FY ’25. This ongoing issue underscores the difficulties posed by international trade tariffs.
EMEA Performance Issues
The EMEA region experienced a 6.5% revenue decline in constant currency, attributed to project delays and softer performance in the UK and Turkey. This highlights regional challenges that the company needs to address.
Forward-Looking Guidance
Looking ahead, Landis+Gyr expects net revenue growth between 5% and 8% in FY 2025, with an adjusted EBITDA margin of 10.5% to 12%. The company remains focused on enhancing grid edge intelligence and expanding its software and services offerings, which now constitute 35% of the backlog. These strategic priorities are expected to drive future growth and profitability.
In conclusion, Landis+Gyr’s earnings call revealed a company navigating both opportunities and challenges. While strategic and sustainability achievements are commendable, the decline in revenue and tariff-related issues pose ongoing challenges. The company’s forward-looking guidance suggests optimism for future growth, driven by a focus on digital solutions and regional strengths.