Good afternoon, good morning, everyone. As you know, earlier today, Landis+Gyr issued its financial year '23 results adhoc release and accompanying presentation. You can find these documents on our website. Before we get started, we want to emphasize that some of the information discussed today contains forward-looking statements, and we want to explicitly emphasize that there are numerous risks, uncertainties and other factors, many of which are beyond Landis+Gyr's control, that could cause Landis+Gyr's actual actions or performance to differ materially from the forward-looking information and statements made on this conference call or in this presentation. Consequently, Landis+Gyr can give no assurance that those expectations will be achieved. For more information, please see Page 2 of the presentation and our press release issued today. This conference call will follow the presentation. So we suggest that you have it on your screen or otherwise available to follow along with our remarks during the first part of this call. Afterwards, you will have the opportunity to ask questions. Meruna will provide further instructions as we start the Q&A. With that short introduction, I'd like to turn over the call to our Chief Executive Officer, Werner Lieberherr.

Thank you, Eva. Good afternoon, good morning, everyone, and welcome to our financial year 2023 results. I'm here with Elodie, our CFO; and Eva, as you just heard, our Senior Vice President, Investor Relations and Corporate Communications. And we are very pleased you have all been able to join us today. We are pleased to report strong results for FY '23, delivering above our guided ranges for the full year and demonstrating our ability to deliver continued strong growth and margin expansion. The return to largely normalized market conditions and a strong focus on backlog execution drove growth and supported our ability to serve customers' demand even better throughout the year. Continued strong order intake and a new record backlog showed the trust our customers have in our solutions and underpinned the resilient nature of our company. Additionally, the rapid push for electrification increases the demand for energy efficiency and grid resiliency solutions. These factors, paired with our strategic transformation, provide a solid foundation for sustained profitable growth. The increased need for intelligence at the grid edge positions us in the sweet spot of the energy transition as we continue to expand our end-to-end solutions to enable our customers to manage energy better and drive the decarbonization of the grid. Now let's talk about what's been happening over last year and move on to Slide 3. We are pleased to announce an order intake of almost $2 billion, driven by Americas, resulting in a book-to-bill of above 1 and a new record backlog of almost $3.8 billion. And we were able to deliver strong net revenue growth, over 15% year-over-year in constant currency, making FY '23 our best year ever since IPO. Adjusted EBITDA margin came in above the guided range with 11.4% due to operating leverage and steady recovery of supply chain costs. Free cash flow returned to robust levels with over $91 million. And on June 25, a progressive dividend of CHF 2.25 per share will be proposed to the AGM. In addition, we are excited about new strategic investments and partnerships with SPAN and BRUSA, which allow us to further strengthen our portfolio to equip our customers with integrated end-to-end flexibility management solution. Moving on to Slide 4. Our portfolio enables us in a unique way to have a direct sustainable impact. In FY '23, we were able to avoid over 8.9 million tons of CO2 emissions through our installed base of smart devices using a new methodology developed together with Carbon Trust. As a result, we were able to help avoid almost 7 times more carbon emissions than we produced. With the approval of our Science Based Targets initiative decarbonization targets, we continue to improve our performance on our journey to reduce carbon emissions. And we continue to measure our ESG progress against 20% of our short-term incentives for all eligible employees. On May 30, we will publish our sustainability report as part of our annual report and invite you to take a look on our website once these documents are published. Let's turn to Slide 5 and have a look at the developments in each region. I'll start with the Americas led by Sean. We have continued to build strong momentum through FY '23 with key strategic wins and exciting deployment milestones. We were able to book a stellar order intake of over $1.2 billion, a book-to-bill ratio of 1.1, resulting in a backlog of almost $3 billion. And for the first time, the Americas region has delivered revenue above the $1 billion mark. With well over 200 agreements signed, doubling year-over-year, FY '23 was a very successful year for the region. And we see good momentum for future growth while the pipeline remains strong and infrastructure investments pick up steam. With many large AMI rollouts underway, which include National Grid, AES Ohio and LG&E, we continue to replenish our record backlog. In smart metering, we were able to win a few notable contracts, including EPCOR in the city of Edmonton, the city of Florence, Alabama and Brownsville. We also made fantastic progress in grid edge intelligence with wins that include FortisAlberta and Tipmont. Lastly, in smart infrastructure, we have expanded our reach as well with a win by Enerpro for our Level 2 EV chargers, AEP Texas and Berkeley. In summary, we are proud to be a provider of grid infrastructure and continue to support great resilience and modernization around flexibility solutions with state-of-the-art cybersecurity applications. On the next slide, I would like to briefly share an update on our leading Revelo platform. Revelo is the only grid sensing platform available today with streaming high-resolution waveform data on every device, providing real-time visibility into where DERs are on the grid, real-time awareness and grid condition, actionable insights for engaged consumers and overall grid reliability through unparalleled edge intelligence. On this slide, you can see a selection of our Revelo customers, which demonstrate wide adoption of this latest technology. In order to realize the true value and benefits of a connected grid, it requires a great sensing platform that was designed to evolve to support utilities of every size for the next 20-plus years. We are proud to report that we have now entered the mass deployment phase, including numerous edge apps spanning consumer engagement, grid analytics, demand response, cybersecurity and safety. Today, over 5 million Revelo sensors and multiple grid edge apps are contracted and in active deployment. Real-time visibility at the grid edge is a key driver for sound analytics and flexible management solutions. Let's move on to Slide 7 and take a closer look at EMEA, led by Bodo. In FY '23, we have successfully expanded our presence across several markets, including Switzerland, Germany, Finland, South Africa, the Middle East and Central and Eastern Europe. This expansion was closely linked to the swift implementation of both ongoing and newly initiated projects while deployment focus was strongly tied to grid edge solutions and smart metering infrastructure. We also see these developments in the regions in both revenue growth of over 10% and margin improvement by 4.9%. And we will continue to work diligently growing our EMEA region profitability going forward. In smart metering, we were able to further strengthen our position with numerous wins, including Oiken in Switzerland and E.ON in Sweden. Despite a slowdown in rollouts in the U.K., we have delivered over 1.6 million smart meters and successfully defended our position as the largest supplier in an increasingly competitive landscape. As a result, we were able to secure an additional 800,000 endpoints with 2 of the largest U.K. energy suppliers. In grid edge intelligence, we have successfully supported our customers with accelerated rollouts to combat the energy crisis and enable the energy transition. Among others, we were able to win contracts with SES in Switzerland and Israel Electric. In smart infrastructure, our EV solutions business was able to secure important wins with key e-mobility players, including EDP, Allego and MOON, a subsidiary of Porsche, who awarded us a frame contract for both our INCH Pro and INCH Duo chargers in Europe. While EMEA continues to recover from supply chain headwinds, we continue to drive innovation. Over last year, we have seen some great wins in the region, positioning EMEA well to capture profitable growth in the coming years. Now let's take a look at Asia Pacific on Slide 8. With David Maclean, I'm pleased to present a new internal leader for our Asia Pacific region. With Steve's well-deserved retirement, we have a worthy successor in Dave, who has been working for many years alongside Steve. And we have concluded a smooth transition on April 1. We are well positioned in our target markets for emerging smart water opportunities across Southeast Asia. And we are working closely with our customers in the Philippines and Thailand to support their AMI rollouts while focusing our expertise in India as a leading services and solutions provider. Australia, New Zealand and Hong Kong remain cornerstones of the region's success. After ceasing manufacturing activities in India, we see a decline in revenue while we saw a nice development upwards for the EBITDA margin, coming in at 11%. In smart metering, we have secured a number of notable wins, in particular with a large customer investment in Australia as well as a leading gas utility in Victoria, Australia. In addition, we continue to keep the momentum going in Hong Kong. In grid edge intelligence, we received an order from Intellihub for the Australian Power of Choice market. And our newly formed joint venture with Esyasoft allows us to continue to serve the Indian market after refocusing our efforts in software, services and solutions. In smart infrastructure, we continue to expand our services revenues with continued growth in SaaS, or software-as-a-service, including wins with Yurika, Energy Queensland in Australia and Watercare in New Zealand. In addition, we are pleased about steady progress in our EV business with Thundergrid as a great addition, bringing home wins to serve the region with transportation electrification needs. Overall, we see a continued positive trajectory that allows us to drive new business. Now let's move on to Slide 9 as I would like to share some more details about a few exciting new partnerships. Let me start with our strategic partnership with SPAN, a leading provider of smart panels and home electrification solutions. Our partnership will focus on unlocking electrification and DER flexibility at the grid edge to cost-effectively advance electrification, create great flexibility and build resilience. Our grid edge intelligence solutions, paired with SPAN Home Energy Management System, offers superior metering and control capabilities, redefining AMI 2.0 and enabling the cost-effective grid management of the future, in essence, a multi-asset virtual power plant. We are excited to keep you updated on the progress we have already made with a few selected launch customers. On Slide 10, I will share details on another partnership with BRUSA. By entering into a strategic partnership with BRUSA, a leading provider of power electronics, we are expanding and enhancing our EV solutions portfolio. Together, we are bringing DC and inductive charging solutions to the market. The inductive charging system is already approved for operation in Europe, China, North America and Japan and will produce notable revenues from FY '25 onwards. As a result, we are further strengthening our position in the EV solutions market for hardware, software and mobile apps. Now let's turn to Slide 11 and take a closer look at our consolidated results. We saw significant revenue growth led by Americas and EMEA, supported by catching up on pent-up demand of around $120 million, and continue to see positive momentum based on our record backlog, demonstrating the trust our customers have in us and our solutions. Adjusted EBITDA expansion was driven by steady recovery of supply chain costs, operating leverage and operational efficiencies. Earnings per share, excluding the Intellihub divestment, increased by 112.4%. Overall, I'm very pleased with the results. Now Elodie will give you a more detailed review of the financials. Afterwards, I will come back to our guidance before we open up the call for questions. Elodie, please.

Thank you, Werner. Hello, everyone. I will now walk you through the details of the financial year 2023. As mentioned by Werner, order intake was at $1.978 billion. This results in a book-to-bill ratio above 1 for the company, driven by the Americas with key wins like TEPCO, PPL, Omaha Public Power and Salt River Projects. Revenue growth was very strong year-over-year. And it is important to note that orders continue to keep pace with our top line expansion. Our backlog reached a new record level of approximately $3.8 billion. This continues to be a very positive development and secure our future top line growth. Let's now turn to net revenue on Slide 13. Our net revenue result for the year was $1.963 billion. This represents a growth of 16.7% in real terms and 15.6% in constant currency versus prior year. Overall, a very strong focus on backlog execution and the catch-up of pent-up demand drove significant top line growth. Americas revenue performance continued to be particularly strong, driven by our North American market and Japan. EMEA growth was driven by France, South Africa, Switzerland and Germany while we continued to see softening in the U.K. market. APAC experienced a decline in revenue, predominantly driven by India as a result of our decision to cease manufacturing activities in the country in the last fiscal year. Overall, we saw a very strong performance on top line throughout the year with a positive impact on EBITDA. Let's look at this in a bit more granularity on Page 14. Our adjusted EBITDA increased from $139.9 million to $223.9 million year-over-year. This translated into an adjusted EBITDA margin expansion year-over-year from 8.3% to 11.4%. The margins benefited from a significant volume impact due to the strong revenue growth, particularly in the Americas and supported by EMEA. Additionally, gross profit margin was impacted positively by improved operational performance, including the steady recovery of supply chain costs of approximately $28 million year-over-year. Finally, our adjusted operating expenses increased by $22 million year-over-year. Reasons for this development were the ramp-up costs related to backlog execution as well as future backlog conversion and increased variable compensation, particularly in North America, investment in EV technology and ramp-up of our acquisition, Luna, in Turkey as a broader manufacturing platform in EMEA and continuing investments in our strategic initiatives in gas and water ultrasonic technology as well as grid edge intelligence and software solutions. As you're aware, we adjust EBITDA to provide a more accurate reflection of our operational business performance. Turning to Page 15, we will discuss the bridge from reported to adjusted EBITDA in more details. The bridge between reported and adjusted EBITDA contains three items as usual. First, restructuring. In FY 2023, the restructuring charges are primarily related to global restructuring initiatives completed in the fiscal year called Project Horizon, which aimed at streamlining the organization and delivering operational efficiencies by reducing the workforce by about 200 positions. Second, warranty normalization adjustments. This adjusts the warranty provision amount made in the fiscal year relative to the 3-year average of actual warranty cost incurred. Here, the downward trend for prior year continue and shows lower warranty cases in recent periods. And third, timing differences on FX derivatives. This adjustment excludes unrealized losses of $0.9 million related to mark-to-market differences on our FX hedges. With this, let's now turn over to our cash performance on Slide 16. In 2023, our free cash flow generation, excluding M&A and investment activities, was at $91 million, a strong recovery versus prior year, driven by improved profitability and a strong focus on collections. Overall, with a significant increase on top line, working capital increased by $41.7 million yet improved as a percent of net revenue. As anticipated, inventory levels have reduced throughout the second half of the year by approximately $50 million. And we are expecting that this positive development continues in FY '24. With our focus on inventory reduction, we decreased also our purchasing volumes and will, therefore, also decrease on our accounts payable balances. CapEx was up $30.6 million or 1.5% of net revenue, primarily focused on new product introduction and upgrade of manufacturing facilities. Lastly, as Werner mentioned earlier, we made 2 minority investments for a total of approximately $72 million in strategic partner, BRUSA Elektronik and SPAN. With this cash performance, let's have a look at the net debt situation on Slide 17. As of March 31, '24, the net debt position was $131.3 million. Net debt was impacted by the following items

first, the dividend payment of $70.8 million that was made in June last year; second, M&A and investment activities that were $72.8 million, as just mentioned; third, our free cash flow generation of $91 million; and lastly, FX and other impacts that were negative $13 million with the main drivers being realized FX losses, repurchasing of some treasury shares and debt issuance-related costs. Worth to note as well that in February '24, we successfully completed the refinancing of the company and secured a $500 million facility that will be available to us for a period of 5 years. Overall, we continue to maintain a strong balance sheet with a net debt to adjusted EBITDA ratio of 0.59x. And this really provides a solid foundation and a great platform for future growth opportunities. With this, we move to a deeper look in the regional performance, starting with the Americas on Slide 18. So in the Americas, order intake was over $1.2 billion, resulting in a book-to-bill ratio of 1.1x. At the end of FY '23, committed backlog was on a record level close to $3 billion. And in 2023, revenue increased by 27.4% to $1.131 billion, a record result for the region, breaking the $1 billion mark. The expansion was driven by a strong focus on backlog execution as well as catching up on pent-up demand as we saw recovery of the supply chain. Adjusted EBITDA margin increased by 300 basis points to 16.4%. The expansion was primarily driven by higher operating leverage. Operating expenses were impacted by further ramp-up of investments to support backlog execution and future conversions, increased variable compensation as well as investment in strategic initiatives. If we now move on to the performance of EMEA on Page 19. In the EMEA region, we recorded a book-to-bill ratio of 0.9x that was supported by order intake in Switzerland and Israel. Revenue increased by 7% in constant currency to $668 million. The revenue growth was driven by strong demand in France, South Africa, Switzerland and Germany and partially offset by softening in the U.K. market. Adjusted EBITDA improved to $17.5 million, resulting in a margin of 2.6%. The 490 basis points EBITDA margin increase year-over-year was predominantly driven by operational leverage on the back of higher volumes, some recovery of supply chain costs and improved mix. At the same time, we continued investing in developing our EV solutions and the ultrasonic water meter technology as well as the expansion of the Luna business. Now looking into our APAC region on Slide 20. In the APAC region, we recorded a book-to-bill ratio of 0.8x. The year-over-year decline of order intake is predominantly driven by the discontinuation of manufacturing in India. APAC revenue decreased by 12% in constant currency to $164 million, driven by India and Bangladesh that was partially offset by strong demand in the Philippines and Hong Kong. Adjusted EBITDA margin expanded by 410 basis points to 11% due to a more favorable country mix, operational efficiencies and a steady recovery of supply chain costs. So after this overview of our '23 results, I will now hand it over to Werner for the guidance for 2024.

Thank you, Elodie. Turning to Slide 21, let's talk about the guidance for FY '24. Following an extraordinary year of growth, we expect low single-digit revenue growth for FY '24 compared to '23 while we continue to focus on expanding our profitability. As a result, for FY '24, we expect an adjusted EBITDA margin between 11% and 13% of net revenue. Lastly, we continue to follow our progressive dividend policy and a dividend of CHF 2.25 will be proposed to the AGM on June '25. As outlined during our Capital Markets Day, on Slide 22, you can see that we will continue to drive our strategic transformation forward while managing costs diligently. The guidance for FY '25 is hereby confirmed. And now we will open up the call for questions.

[Operator Instructions]. The first question from the phone comes from Michael Roost with Baader Helvea.

I just have two or three questions if possible. So the first question is kind of, I would say, generally regarding the regional development for the next year, so for the following year. And I would say, could you maybe give us a little bit more color in terms of what you see currently in the Americas, EMEA and Asia Pacific in terms of development of order intake, so to speak, i.e., are you still expecting a further increased order intake? And then maybe the second question is on the EBITDA by segment, so adjusted EBITDA. How are you expecting that to continue for the next year? And what I mean by specifically is also regarding Asia Pacific because the margins there have reached quite a high level. I'm just wondering, is that sustainable? Or do you expect more expansion to come from EMEA and Americas? And then my final question is just on restructuring, if you're expecting any more charges for this next year.

Yes. Thank you very much, Michael. Great questions. First one, regional development, clearly, we have 60% of our revenues coming from the U.S. I expect that to stay like that. The U.S. is not only the largest but also the most profitable market. We see very solid targets. Clearly, I expect in the U.S. a book-to-bill of 1

1 or higher. So I think looking at a further development, looking what also the government is doing in terms of funding a lot of the projects, I think, remains extremely strong. EBITDA -- sorry, EMEA, also we see very good potential. As you can imagine, also in Europe, it's important to have more intelligence in the grid. We need to keep in mind that we see more renewable energy coming in on the production side. We see actually more EVs, heat pumps on the consumer side. So there's more volatility in the grid. And with that, we also, in Europe, we need more intelligence in the grid. So I expect also in Europe, we should see good targets. And then APAC, a little bit more commoditized. But also there, we have three extremely strong markets, which is Australia, New Zealand and Hong Kong, but then also in Southeast Asia, Malaysia, Indonesia, Philippines, Thailand, also there, good development. So I would say, clearly, strongest growth we see in Americas in summary, but then also in EMEA and APAC, good developments. In terms of margins, clearly, in the U.S., also, it's critical infrastructure, no Chinese, no Russians makes a difference, also very dated grids, which requires actually more intelligent, more differentiated products and services. From even I look into '25, clearly, I see the Americas on the cost were 18%. There's no question about that. They came in now at 16.4%. They will go in between in '24 and then in terms of review and then go to '25. EMEA, it's a little bit a different case. We expected originally stronger margins, supply chain not yet coming down the way we expected. But we clearly see that now coming. The supply chain normalized, as you heard during the introduction, which I think is positive. So from the 2.6% going in between and then going to 10%, we are not changing. The target for that, we have the right strategic initiatives in place. I believe that we can do that. Asia Pacific, 11%. I would say for '25, we leave that at 10%. We are on a good track with the 11%. But we also need to keep in mind, we will also compete in some of the markets, Southeast Asia, where it is a little bit more commoditized than maybe in some, for example, like we would do that. And then the last one is restructuring more charges. No, restructure is pretty much completed. By the end of '23, we see some severance practice, obviously, going into '24 but pretty much completed and done, this Horizon Project.

Okay, that's perfect. And maybe just one follow-up, just [indiscernible] have it around my head, just generally, and this is more sort of long-term question for the EMEA market itself. Obviously, with your product offering that you can basically offer more in terms of a whole package to your customer, i.e., the utilities, is that giving you a better or, let's say, strengthening your competitive position against the other more sort of fragmented competitors within EMEA?

Definitely. The way we are able to offer end-to-end solution, including head-end system, including grid analytic platforms and more software than others, really turnkey packages, that definitely gives us a competitive advantage. I would say we do not yet see that to the degree as we actually would like to see it. But definitely -- and then the other thing, Michael, what I would like to mention is, obviously, we are also pushing -- we are pushing, the water meter has been finished. We pushed that into the market. Generally speaking, water has very strong, solid margins. EV, we are pushing in the market, which also we see a higher margin. So I think from an overall perspective, I think we are trending in the right direction.

The next question from the phone comes from Akash Gupta with JPMorgan.

I have a few questions as well. My first one is on R&D spending, which if I look at in your P&L has come down from 9% of revenues for the full year down from 10.4% a year ago. It looks like you have slowed your R&D spending compared to the growth in revenues that we have seen. So maybe if you can talk about your R&D policy, are you looking to spend less in some of the areas which could explain this drop in R&D ratio? And any guidance on where you expect R&D going forward? That's the first one to start with.

Yes. So when we think about R&D, we said largely around 9%, I think we are about there, obviously, also helped a little bit is the growth in revenue. But then looking into '24, we also have some initiatives, which we kicked off, for example, even which are new, for example, with SPAN, with BRUSA, which costs a little bit money. So I think to make an assumption, plus/minus 9%, it's a good assumption.

And my second one is outlook for orders. I mean, in your opening remarks, you said there is a rapid electrification, which is driving demand for grid resilience. But when we look at your orders, we don't really see any inflection there. So maybe if you can talk about how do you expect order growth in the next 6 months -- 6 to 12 months? And do you see any inflection in customer demands in the coming period?

Yes, yes. So look, for example, when we look into the U.S. alone, Akash, then what you will see is that the U.S. is really kind of an inflection point. We will see next 2 to 3 years, we see a quite an increase in terms of energy consumption due to heat pumps, EVs and so on, which maybe is not yet reflected to the full degree. But there's no question that we do see that type of increased demand. And we did have in the U.S., a book-to-bill of 1.1, which was great. And we clearly see in the U.S., as we grow revenues, we would see book-to-bill of 1

1 or better. I expect -- I actually expect better in the U.S. And pretty much for Europe and APAC, our clear declared targets 1

1 or better. We have not seen it exactly in EMEA and APAC. But some of it is also a little bit timing. I think most important is, obviously, we achieved it for the company, where we were able to do a 1

1. But also in EMEA and APAC, we see further opportunities to achieve that target.

And my final one is on your reporting. So I mean, you do report geographically, which is good to see the development. But then you also have three segments like smart metering, grid edge intelligence and smart infrastructure. And I wanted to get some insight on when we look at your 2023 performance and instead of looking at geographically, if we look at by business, how does this growth and margin expansion compares in the three segments, like smart metering, grid edge and smart infrastructure? And when it comes to the guidance, could you provide some more granularity that how does this low single-digit growth compares with these three verticals?

Yes. So no, thank you, Akash, great question. So we do think exactly what you said, smart metering, grid edge intelligence, smart infrastructure. Let's say a smart meter goes into smart meter as the name says. And then that's actually like a Revelo meter goes into grid edge. There's also software and then smart infrastructure, like EV and so on. And what I would like to say is what is very important is, obviously, as we go more into grid edge, more into smart infrastructure, more software and services, we like that. I think that's a very important piece. Because inherently, it has larger margins. We also see actually that on these large contracts like, for example, National Grid, which is $300 million in New York alone. And then obviously, on top of that, we have Rhode Island and Massachusetts. And when you look into that, we are really talking then about we have 20% to 30% actually software and services. And I think that's how -- what we can say that we really are pushing towards actually going in the direction of software and service in the direction of 30%. And that's very important from a profitability perspective. That also allows us, obviously, to expand margins.

Our next question comes from Lothar Lubinetzki with Octavian.

Just a couple of questions. First, I come back to the first question, which was looking at margins. If I compare your target for the U.S., 18% by 2025, with the real sweet spot, which was above 20% or even slightly higher, do you think you can achieve that, especially if you increase the software and the service content?

You mean 20% EBITDA margin? Yes, look, my view is this -- sorry, Lothar, go ahead.

No, no, go ahead.

Look, my view on the U.S. is as follows. I think it's a great market. I know the utilities obviously very well, I lived there for 20 years. And they need differentiated technologies, you know what I mean? And I think we have excellent customer intimacy, leading technology. So the way we see it is that we said 18% in the U.S. by '25, EBITDA. But for me, it's clearly that there's more runway. My view is -- my personal view is that we will go to 20%, yes, beyond '25.

And second question is can you give us a roadmap on how and when you can get to the 10% in EMEA from the 2.6% you have today?

Yes, yes, yes. Lothar, so our target is unchanged. And you may be thinking it's a little bit ambitious, I would agree with that. Our target is clearly we want to be at 10% by '25. So why do we think that's possible, Lothar? First of all, we will also see in EMEA, more software and services. I think that's very important. Secondly, we see footprint rationalization, which we are doing also in some instances, Lothar, where, for example, customers says, "I don't care whether it's European-based or a Chinese product." We can do that, too, in terms of contract manufacturing. I think we are equipped to do that. We also have very good manufacturers there. And then we do -- supply chain is a critical piece, where I expect larger supply chain actually easement. EMEA was much harder hit actually in the last years than the U.S. just due to the setup. And then we did Horizon, where we had around $14 million, $15 million of cost and around $12.6 million in savings going forward -- sorry, it's actually the other way around, around $14 million of savings and cost, I think, around $12.6 million. And then last but not least, we also watch the R&D very carefully. But these are the drivers, Lothar. And I know it's an ambitious target. But we are not willing to give up on that. I think it's really -- it's in our right side, and we will push it extremely hard.

That's now the second or third time you are talking about the supply chain in Europe. From the outside, I had the feeling that supply chain already normalized. Is there much more to come?

Yes. I mean, look, we saved actually $20 million in last year. But for example, if you look just in Europe alone, we saw from '20 to '21, we saw around $13 million going after cost. And we see from '21 to '22, another $32 million. So this is a big, big number. So we are talking around $45 million just for EMEA alone. And then we saw now a saving actually of around $10 million. So then we are down to $35 million. Yes, there's definitely significant supply chain costs, which still need to come. And that's an important piece for EMEA and a big driver also in terms of the margin improvement.

And then different issue, can you share with us your ideas on the free cash flow for the current year?

Definitely. Elodie, why don't you talk about that?

Yes. So on the free cash flow, as you saw, we generated $91 million in 2023. That was on the back of our previous year, where there was a significant inventory increase to support, obviously, the high growth trajectory on the revenue side that we did. We did see inventory start to reverse in the second half. As I mentioned, we saw a reversal of $50 million in the second half of last year. We will...

Sorry, $15 million or 50 million?

$50 million, 5-0. And we will continue to drive inventory efficiency in 2024. So we will also continue to drive more working capital efficiency in this direction in the course of the coming year. So basically, continued focus on cash flow generation, as we are known for as a company. And really on working capital, we are good on collections. So the question is really now more efficiency on inventory, which we already [indiscernible]. Last but not the least...

No, no, so if I look at your balance sheet, inventories year-over-year have hardly moved. And also, in the cash flow statement, there's basically no change.

Why I mentioned the second half because year-over-year, we reduce inventory by about $5 million. But you saw compared to our financial in September, a decline about $50 million. And as I said, we do anticipate more to come in 2024. And last but not least, as you know, we operate an asset-light model. I talked a little bit about CapEx. We do give guidance of CapEx between 1% and 2%. We spent about 1.5% in 2023. And I would expect this guidance of 1.5% to 2% would also be good to be assumed for '24.

And last question, you mentioned that you were good in collecting receivables. On the other hand, you seem to be quite generous when it comes to paying your bills because credit liabilities came down much more.

You're right. And as I mentioned a little bit earlier, this is also on the back of our very focused burn-down of inventory in the second half. So as we were focused on reducing inventory, we also in the second half lowered our accounts payable because we simply bought less material. And as you see reflected in our second half year financials. So again, I would expect this slowly to reverse in 2024 as this was a temporary one-time effect.

But good observation, Lothar.

The next question comes from Jeffrey Osborne with Cowen.

Just a couple of questions on my side, Werner, I was wondering on the North America side on the backlog that you have, how much of that is adjusted for inflation versus subject to escalated costs in semiconductors? And then on the semiconductor topic and supply chain, are you starting to see, beyond the easement of supply, are you starting to see any lower prices potentially be a tailwind in the coming quarters and months?

Yes, very good. Jeff, as for the backlog in the U.S., obviously also, we went through quite some discussion with customers. We did say in the past that we have around -- 30% is really short flow orders, which we like. The customer comes and it's standard equipment, we can deliver it in 2 to 3 months. So that's the easy part. And then 70%, we have -- where we have adjust and non-adjust. And what I can say, Jeff, to a large degree, we do have adjustments, which I think is great from a supply chain perspective. The other thing that I would like to say, Jeff, is that when I think about supply chain in the U.S., it's pretty much normalized. The U.S. business will be pretty much back to 2021 level. So you'll see quite a vast difference between Europe actually and the U.S., which is great and which also allows us actually then to really push margins. Last point I just wanted to say, we also have quite a few contracts, 213 contracts actually signed with 50% software and services. And that's another, obviously, Jeff, as you can imagine, kind of protection in terms of hardware inflation.

Just to unpack that a bit more, is it specifically the PLC chip in Europe that's the problem then?

The chips, sorry, Jeff, say it again?

Is this the power line carrier chipset for Europe that's the challenge still as it relates to the margin?

Not only. I mean, the way we set it up with the large supply chain and the large chip and electronic manufacturers, it was really -- it was not by design. We tried to hedge actually operationally. Because in Europe, we have euro contracts and also tried to make a natural hedge, so to speak, also in terms of supply chain. But that didn't exactly work out. And so it's really across various components. Actually, in Europe, it takes longer, Jeff. What I can say is Europe will be back on 2021 level by the end of fiscal year '24 and then back to 2020 level by end of fiscal year '25. In the U.S., we already will be back at 2020 level, fiscal year 2020 level, by the end of this fiscal year, which is FY '24.

Got it. And my last question is just on the TEPCO. You mentioned it a couple of times. But just to be more granular, have you renewed your contract with them? And then could you explain what your relationship is with TEPCO as it relates to sort of a post-Toshiba world as they look to upgrade their network, I think, which they're required to do every 10 years?

Yes. So TEPCO, I just visited them actually maybe about 6 weeks ago, phenomenal relationship. When I came into Landis+Gyr, actually I had a little bit of a [indiscernible] moment in the way that I said, "Oh, Toshiba are not here anymore. What does it mean?" But I can tell you, extremely strong relationship with TEPCO, what I think is phenomenal. In terms of TEPCO, we are delivering a head-end system communication. So the meter itself is a local metering supplier. So there was no scope reduction the other way around. We had a very solid actually contract win in actually 2023.

The next question comes from Patrick Rafaisz with UBS.

Three questions, please. The first would be a follow-up on Lothar's very good question around free cash flow. I understand, Elodie, what you explained, inventories are going in the right direction. There's more way to go. Then we have payables, which will normalize, but receivables also look historically extremely low. So there must be some cash or capital absorption happening this year. And in the past, you did provide a quantitative guidance. But this time around, you decided not to. So I'm just wondering, what's the rationale behind that? Is the uncertainty so high currently? Or are there some unknowns ahead that we should maybe consider? Can you just elaborate a bit on that?

Yes, Elodie, yes?

Yes, Patrick, thanks for your question. So for the guidance on cash, I mean, if you remember from our Capital Markets Day last year in January, we did discuss this point. We are or we were actually one of the only companies giving so specific cash guidance. We have said in our mid-term guidance at the time that we would obviously focus on cash generation, which we do. And we've proven that again in '23, but that we would not do specific cash guidance anymore. And that's what we have now done also for 2024. So there is nothing that's driven by the big volatility or anything like that. It's just something that we've already announced some 18 months ago. So that's on the guidance piece. And on the actual cash conversion and cash generation, I mean, you see here, we basically generated $91 million of cash on $224 million EBITDA. This is a little bit below our historical cash conversion. We normally walk in with 50% to 60% cash conversion. And that's something that we will continue to drive in the future. There is no particular exceptional element or one-time items on the receivables, collections. We continue to be very good as a company. And I think that's a very positive drive that we have. And obviously, we will continue to drive that.

Patrick, you said you had three questions?

Yes. That was very clear, Elodie. So we think in that 50% to 60% conversion ratio going forward. That's very helpful. Second question...

Patrick, just to say that assumption, as we said, we are -- in 2022, we really delivered actually double the amount of the competition because of strategic inventory investment, which are now coming down to Lothar's question, but not yet fully down but on the way down. But once that is off, I think the 50% to 60% for your models, it's a very good assumption.

Yes. And the second question would be on the outlook for Americas in this fiscal year. You mentioned some catch-up effects from '21/'22. Would it be possible to quantify how much of these, let's say, delayed revenues you recognized in the last fiscal year? I'm trying to understand how much you need to catch up, how in terms of growth in Americas for fiscal '24 before you're actually growing organically again. Or asked differently, will you be actually reporting organic growth also in Americas this year? Or will it be more a flattish period?

Look, when we think about '23, out of the $120 million pent-up demand, as we call it, pretty much everything actually happened in the U.S., so just put to it in perspective. And therefore, in '24, we do see a flattish actually number going forward because it's just what happened in '23. But as I said, I mean, the prospects in the U.S. are phenomenal.

Okay. So the local currency, the low single-digit growth will more be supported by EMEA and APAC temporarily?

And the U.S. But I'm saying it's a low growth environment we are in because we had this larger pent-up demand in '23.

Okay, understood. The last question would be on the partnerships you announced, SPAN and BRUSA. Of course, you spent some money on that, right, the $70-something million. Can you talk a bit about the economics for these partnerships and paybacks?

Look, maybe I start with SPAN in the U.S. SPAN, we made $50 million investment in SPAN. What SPAN and us can do actually in the U.S. is that obviously our Revelo meter provides the total constant visibility, what's going on, on a household level. And with this gateway, which we developed together with SPAN, it actually -- we can then control on a household level in terms of, for example, EV capacity or water heater or whatever. And I think that's super important. And just to give you an example, with this type of solution, for example, in California to upgrade the grid, it will be around $55 billion. But with this type of solutions, it's around $3 billion to $5 billion. So you see a big factor. I cannot give you specific numbers yet. But I tell you, we talk to large utilities in the U.S., like Duke, like SoCal, Edison in California, they are excited about the solution. So we start actually really put pilots into the field starting in '25. The other thing is BRUSA. BRUSA for us, equally exciting. Their inductive charging product has been certified. We expect first revenues in '25. And that's also part of our $100 million commitment, as you remember, which we gave at the Capital Markets Day, January '23. But BRUSA, clearly, we start actually recognizing revenue in fiscal year '25.

The next question from the phone comes from Urs Emminger with Research Partners.

Most of my questions have already been asked and answered. So two minor questions, first one, tax quote was a positive surprise. What should we put in going forward? What kind of tax percentage should we put in, in our models? That's the one thing. Then I saw that cash in the balance sheet and cash flow statement was slightly different. There's some mentioning of restricted cash. Perhaps you can explain this little difference just so.

Yes, Elodie, why don't you -- the first one was about tax. We had a little bit acoustical problem. Elodie, talk about tax.

Yes. If I understood your question well, Urs, it was about the tax rate in 2023 that was low and what we expect going forward in your model, right? So let's start with the 2023 low tax rate. Yes, it was low, 13.8%. It was driven by the reversal of valuation allowances, so write-off of tax losses that we had, in particular in India and in South Africa. And we believe that these losses will be used in the next year, considering the profitability in these countries that are looking to improve. And therefore, there is a reversal here. Without this exceptional impact, our tax rate would be in the range of 21% to 22% in FY 2023, which looks more in line with our normal level of tax rate. And so going forward, we've always said somewhere in the range of 20% to 25%. And that makes sense on a normalized basis.

Second question, can we answer it directly? Or should we make a follow-up on that?

What was the second question? Okay, what was your question?

Yes, what's the difference?

We will follow up with you separately on this particular question.

Yes. We'll take this in action and then we'll come back to you directly.

The next question comes from Doron Lande with Kepler Cheuvreux.

I have two remaining questions. And the first one is on the -- I tried to put the two guidances on growth into context, especially when it comes to the big picture with the low single digits. You will be -- I see that in the CAGR of the mid-term guidance that it would imply that the next year will be also rather on the low single-digit level. Is this the new normal? Have we reached the ceiling? Or how should we look at this situation there?

Yes. No, thank you, Doron, for the question. No, it's not a new normal. It's really just a pent-up demand, which we experienced in '23, of these sectors on a higher level versus '24. But we actually -- what we did say mid- to high single-digit, that's a good assumption, Doron. Absolutely, we feel comfortable with that. But again, that was just a catch-up, which we now saw with this very strong 17.6% year-over-year growth, or in constant currencies, 15.6%.

Okay. And my final question is on the EV charging solution category. I remember the target there is $100 million by 2025. We're almost there. Could you give us maybe an update where we are in terms of revenue already and maybe what are some further plans there? Or do you plan more acquisitions in that area?

Yes. So the way we think about the $100 million, which the commitment we did at Capital Markets Day, January 2023, what we see is the EV market cooled down a little bit globally due to missing subsidies and that type of thing, as subsidies which expired. And also, some -- you saw first-mover advantages of EV owners and now slowing down a little bit. However, what I can -- I have a little bit of echo, sorry, Doron. But what I can say, Doron, is that when you look at our business, when you look at our own business, together with BRUSA, we will achieve that. We will achieve the $100 million by the end of '25.

And more acquisition in the pipeline from that?

Doron, say again?

We have other acquisitions in the pipeline?

No, no, we feel we can do it actually with our own setup we have. We are -- obviously, we do AC charging. With BRUSA, with the technology partnership we have, we do inductive charging, also look into DC charging. So we feel actually -- then we have Thundergrid, which is doing turnkey solutions also in Australia. We also delivered software, a load management software to BRUSA in terms of the application. So we feel that we can do it actually with the current configuration of businesses.

The last question for today is a follow-up question from Akash Gupta with JPMorgan.

I have a more high-level question. One of your U.S. competitor, or I should say, your key U.S. competitor hosted a Capital Markets Day recently, where they guided 5% to 7% medium-term CAGR -- revenue CAGR over 2023 and 15% to 17% adjusted EBITDA margin. When we look at your business and compare with their business, are there any reason to believe that your performance could be materially different than theirs? Any comment on a high level would be welcome.

So no, look, I mean, Itron is a formidable competitor. To be clear, we compete head-on every day. What I would say, Akash, if you look a little bit into history, we had extremely strong '22/'23 deliveries. And therefore, there's a little bit the catch-up, which now we obviously experience in terms of the '24 numbers. But inherently, there is no difference in structure or competitive positioning. I think we win our fair share of market -- in the market, our fair share in the market. So there's Itron. So I feel there's not much difference. Then Meruna, I think that's the end of the questions?

There are no more questions, sir. Yes, correct.

Very good. Okay. So thanks for your questions. I think excellent discussions. I'm going to close the call in a moment. But before that, I would like to leave you with this slide as a reminder of the key takeaways of today's call. First, a record backlog of almost $3.8 billion demonstrates really our leading technology positions, motivates us to keep delivering leading-edge innovations to our customers. Secondly, we were able to deliver strong results above guidance and continue to expand our leading position. Third, we are focusing on further expanding profitability in FY '24 and reconfirming guidance FY '25. As we continue actually transforming Landis+Gyr by expanding our software and services, you have that before, and also flexibility management solution, which would be today, we didn't talk so much, but that's also very, very critical in our value position. So in a nutshell, look, we are very motivated. I think we are a recession-resilient company. We are in the sweet spot of the transition and also further amplified by the current energy situation. With that said, I feel that we have the right strategic focus to drive future profitable growth. And I really would like to thank at this point in time, all of you on the call here today, customers, shareholders for the continued trust, and our employees who actually really are grinding in the trenches every day. So thank you very much for joining us today. Stay safe and healthy. And I look forward to meeting all of you soon virtually or in person. Goodbye, and have a good day. Thank you.