Landis+Gyr, the Swiss-based smart metering and grid networking conglomerate, reported its fiscal year 2017 results this week — its first full year as a publicly traded company.
On the top line, it was a good if not spectacular year, with revenues of $1.74 billion, up 4.7 percent from the previous year, and reported net income of $46.4 million or $1.57 per share, compared to a net loss of $62.6 million or $2.12 per share in the prior year.
The company’s growth in advanced metering infrastructure (AMI) project sales in North America, France, Spain, Portugal, the U.K. and Hong Kong was counterbalanced by industrywide “shortages of certain key electronic components which particularly affected product sales in Europe," CEO Richard Mora said.
Still, the overall performance “met or exceeded the key guidance parameters for the Group issued at the time of the IPO" and “demonstrated our ability to deliver top-line growth and solid cash flow,” he said.
Tuesday’s report also offers a valuable look into the structure of a company that’s been privately held for almost all its history, including the fact that it lost money during its last year as a subsidiary of Toshiba. This underscores the urgency of the company’s efforts to distinguish itself from its struggling parent company as it first sought private buyers, then decided on an initial public offering in July 2017.
Landis+Gyr, a century-old gas metering provider whose modern incarnation included ownership by KKR and Siemens in turn, was bought by private equity firm Bayard Capital in 2004. The company added cellular metrology provider Cellnet and Hunt in the years after that to become one of the world’s biggest smart meter vendors. Bayard sold it for $2.3 billion in 2011 to a consortium including Toshiba, with a 60 percent stake, and Innovation Corporation Network of Japan, with a 40 percent stake.
As part of Toshiba, Landis+Gyr won some of the world's largest AMI deployments, including 16 million meters for British Gas and 27 million meters with Tokyo Electric Power. But the bankruptcy of Toshiba’s Westinghouse nuclear business, along with accounting scandals at home, pushed the company to the brink of insolvency, a situation only fully resolved with the $18 billion sale of Toshiba’s lucrative microchip business to a Japanese-Korean-U.S. consortium last month.
Landis+Gyr’s July 20 IPO on the SIX Swiss stock exchange raised about $2.4 billion on an offering price of 78 francs ($80.20), providing Toshiba a net profit of $357.3 million, indicating a valuation that has grown with the company since its acquisition. Since then, the company has traded between $80 and $65 per share, more recently in the lower half of that range.
Landis+Gyr’s chief competitor is Itron, the U.S.-based smart metering giant that has gotten even bigger with its $830 million acquisition of Silver Spring Networks. Itron completed the acquisition in January, and last month reported its first quarterly earnings as an integrated company, with Silver Spring adding $86 million to its $607 million in revenue for the first quarter of 2018, as well as adding $1.4 billion to its total backlog of $3.1 billion.
Landis+Gyr’s report used slightly different terms to describe its book of future business. Order intake for fiscal year 2017 was $1.57 billion, up $248.9 million or 18.8 percent from fiscal year 2016. But committed backlog declined by 4.1 percent over the same period, to stand at $2.39 billion, putting it behind Itron on a key measure of future market share.
Landis+Gyr has announced some big contracts in recent months that could boost its total backlog. For example, earlier this month it announced a framework agreement with Sinfra, a Swedish energy industry procurement and purchasing organization, to supply its more than 190 member companies with smart metering products and services. These include the G3 power line carrier and narrowband internet of things technologies favored for the country’s second-wave smart meter rollout expected to start next year and run through 2024.
L+G was a key supplier of Sweden’s first nationwide AMI deployment in 2002, one of the world’s earliest, giving it a leg up on the competition.
Another big deal in May has given Landis+Gyr an ownership stake in its own smart meter networks, though a joint venture with Pacific Equity Partners to acquire Acumen, the smart metering arm of Australian energy retailer Origin Energy, for AUD $267 million (USD $205 million). The JV, dubbed intelliHUB, will be Australia's largest smart meter operator, with an existing 170,000-meter network that could expand to include most of Origin’s 4.2 million electricity customers.
May also saw Landis+Gyr accelerate deployment of the 250,000 smart meters remaining to be installed for Florida municipal utility Jacksonville Electric Authority. In March, it closed a five-year, $240 million credit facility agreement to replace its $215 million bridge loan, and announced that it has deployed about 5 million of its 18 million smart meters under contract in the U.K.
In February it announced a roundup of 46 smaller U.S. public power utility contracts for smart grid technology and services, including more than 350,000 metering endpoints. And in January, Wisconsin Public Service Company picked Landis+Gyr for 450,000 smart electric meters and about 326,000 two-way gas modules using its wireless mesh and its meter data management system under a software-as-a-service agreement to integrate metering data into daily operations.
As for new technology developments, Landis+Gyr announced last month that it’s been working with Swiss cryptocurrency startup and government energy research partner Hive Power to build blockchain technology into smart meters, to enable microgrid energy trading communities to use the Ethereum cryptocurrency as a unit of exchange.
The remaining two global AMI players are Germany's Elster, which was acquired by Honeywell for $5 billion in 2015, and U.S.-based Sensus, which was bought by water treatment company Xylem for $1.7 billion in 2016. Other major contenders in the field include U.S.-based Aclara, Denmark-based Kamstrup, Slovenia-based Iskraemeco, and China's Wasion Group and Zhejiang Holley Liyuan Metering.