Financial year 2021 marked a special milestone in our company’s history, as we celebrated our 125th anniversary. Reflecting on this legacy, we are proud of our heritage as an early industry pioneer, which shaped the way utilities and people managed energy at a time when the use of electricity was in its beginnings. Today, as a leading global provider of Smart Infrastructure, Grid Edge Intelligence and Smart Metering solutions, we continue to shape and support utilities’ and people’s journeys to build a greener tomorrow and stronger communities.
Our strategic vision is driven by the desire to provide unrivaled customer value as the leading partner for integrated energy and resource management solutions with sustainability at the heart of everything we do. Our comprehensive portfolio of products and services uniquely positions us to empower utilities, energy consumers and communities by helping them to manage energy in a more informed and sustainable way and, as a result, reduce their CO2 footprint.
Financial year 2021 was a transformative year for us as we expanded our reach in Smart Infrastructure and Grid Edge Intelligence solutions. We have closed a number of important acquisitions, adding a cost-competitive metering platform and solidifying our position in the EV charging solutions market, while leveraging our co-innovation partnerships to expand our portfolio of data analytics solutions and services.
During the past financial year 2021, our products and services were recognized in the strongest possible way with a record order intake and a record backlog. As a business with mission-critical infrastructure equipment and services, we continue to be committed to our customers’ success and we are pleased to say that the momentum resulting from our record backlog in financial year 2021 allows us to look into the future optimistically.
The continued trust our customers honor us with is demonstrated in meaningful orders across all regions to support efforts to empower consumers and drive our shared vision to decarbonize the grid. Our customers' ambitious targets inspire us every day to continue to innovate leading-edge technology, enabling sustainable resource management. We are proud of the strong and long-standing relationships we have built with our customers over the course of our successful history as an industry-leading provider of critical infrastructure and the collaborative journeys with our customers inspire all of us every day to continue to develop and deliver innovative technology solutions with sustainable impact in mind.
We continue to serve our customers with unwavering dedication, leading-edge technology and the passion to manage energy better. Our three strategic pillars Smart Infrastructure, Grid Edge Intelligence and Smart Metering are the cornerstones in our efforts to drive profitable growth.
Financial Year 2021 Results
The results of financial year 2021 reflect the recovery from the impact of COVID-19 in the corresponding prior year period as well as the constraints in supply chain. Order intake for FY 2021 more than doubled compared with the previous year to USD 2,665.5 million driven by major contract wins in the Americas and EMEA regions, resulting in a record-high committed backlog that increased by 56.5% to nearly USD 3.4 billion, and a book-to-bill of 1.82. Net revenue increased by 6.9% in constant currency, to USD 1,464.0 million in financial year 2021 compared to the corresponding prior period. The EMEA region was the main contributor to the growth as net revenues recovered strongly, up 17.4% in constant currency. The Adjusted EBITDA increased by 5.3% to USD 147.0 million translating into a margin of 10.0%. The constrained supply chain situation negatively dampened revenue growth and led to additional component and freight costs of approximately USD 30 million, while USD 100 million in revenue were deferred. Driving our strategic initiatives forward, we continued to invest in Research & Development, which accounted for 10.7% of our net revenues.
Free Cash Flow (excl. M&A) of USD 89.0 million was strong despite headwinds and continued investments. We managed to maintain a solid balance sheet with low net debt.
After a loss in last year’s corresponding period, net income attributable to shareholders was positive, reaching USD 79.4 million and an earnings per share amount of USD 2.59.
For financial year 2021, a progressive dividend of CHF 2.15 per share will be proposed to the Annual General Meeting in June 2022, after a dividend of CHF 2.10 had been paid for FY 2020.
Outlook for FY 2022
While delivering a strong performance in financial year 2021, as a result of the ongoing global supply chain challenges, we view FY 2022 to be a transition year with continued high investments and increasing supply chain and inflation headwinds before we see the benefits of our transformative initiatives in FY 2023.
While demand among customers remains high, the ongoing global supply chain constraints and the unstable geopolitical situation result in considerable uncertainties and low visibility for financial year 2022. Barring any unforeseen circumstances, we expect net revenue growth in financial year 2022 of between 6% and 10%, including financial year 2021 acquisitions.
In financial year 2022, we continue to invest up to around 11% of net revenue to drive our strategic transformation forward to ensure mid- and long-term profitable growth. Together with higher expected costs from supply chain and cost inflation, the Adjusted EBITDA margin is expected to be between 5% and 8% of net revenues. Free Cash Flow (excluding M&A) is expected to be between USD 30 million and USD 60 million.
Our mid-term targets through FY 2023 are reconfirmed, assuming the supply chain situation normalizes.
Transformative Investments
Reflecting on more than 125 years of excellence, we look to the future optimistically. With our focus on creating value for our customers and shareholders, we are excited about the transformation of Landis+Gyr. Our strategy is designed to broaden our core offering of Smart Metering and further expand our reach in Grid Edge Intelligence and Smart Infrastructure with the objective to transform the business.
Organic investments in Smart Ultrasonic Gas and Water technologies and the acquisition of Luna, which opens new markets and complements our portfolio with a cost-competitive metering platform, are strengthening our core in Smart Metering.
The acquisitions of Rhebo, a cybersecurity company protecting critical infrastructure technology through anomaly and threat detection down to the grid edge, which is critical for utilities as they modernize the grids, and Telia, further enhancing our managed services business in EMEA, are driving the expansion of our Grid Edge Intelligence offering.
As grid complexity increases, we are actively shaping our Smart Infrastructure offering with the acquisitions of Etrel, offering electric vehicle (EV) management software and corresponding hardware technology, and True Energy, an application provider managing the demand of charging processes for increased cost-efficiencies and sustainable energy usage, as well as the strategic investment in the charge point operator Allego. We invested in EV infrastructure technology and holistic distributed energy resource flexibility management solutions. Building on our strong market position, we leverage our close relationships with the leading utilities in key markets by expanding our offering with EV charging hardware and smart charging software, including demand response and flexibility management to allow utilities to better manage the grid. In addition, our seven-year strategic partnership with Google will enable our customers to manage the grid with real-time information and data analytics insights, leveraging machine learning and artificial intelligence to enhance grid operations and empower consumers.
As a result, we ensure that we are well equipped to remain a leading force in the future of energy while doing so in a sustainable way as we continue to invest in efforts to decarbonize the grid and elevate our ESG efforts.
Decarbonizing the Grid
Actively driving sustainable impact is not just what we do, but who we are. Our strategic vision is driven by the desire to provide unrivaled customer value as the leading partner for integrated energy and resource management solutions with sustainability at the heart of everything we do. Our comprehensive portfolio of products and services uniquely positions us to empower utilities, energy consumers and communities by helping them to reduce their CO2 footprint.
Expressing our deeply rooted commitment to our ESG (Environmental, Social, Governance) targets, in the past financial year, we increased the ESG component in our short-term incentive (STI) for all bonus-eligible employees to 20%, while increasing the number of ESG-related STI targets from three to eleven, driving sustainable progress in support of the UN Sustainable Development Goals. These targets include environmental topics, such as the reduction of the company's and its product portfolio's carbon footprint, while increasing the benefits generated. In addition, the targets cover initiatives enhancing diversity, ESG-driven supplier management and governance topics, including employee trainings on compliance.
Having made the commitment to become carbon neutral by 2030 for scope 1 and 2, we are proud to be part of the global efforts to decarbonize the grid and convinced that we are driving the right priorities to continue to support sustainable resource management all over the world. In FY 2021, Landis+Gyr’s Smart Metering base ensured the avoidance of 9 million tons of CO2, while the percentage of products shipped as part of our Eco-Portfolio remained stable at 74%. To further drive measurable progress in our Environmental, Social and Governance areas, Landis+Gyr has committed to the Science Based Target initiative.
Promoting Diversity on the Board of Directors
In June 2021, Laureen Tolson was elected to join our Board of Directors as an expert in the energy and software industry, increasing the representation of female directors, while we continue to be committed to further enhance the diversity of our Board going forward to reach at least 30% female directorship in the near future. For the upcoming Annual General Meeting of Shareholders on June 24th, 2022, Dave Geary has decided he will not stand for re-election as member of the Board of Directors. As a result, the Board will be reduced to seven members.
Passion and Commitment
Our teams around the world continue to drive leading-edge innovation, the strategic transformation of our portfolio and the expansion of our offering in integrated energy management solutions.
Especially in light of the challenges presented by COVID-19 and the continued constraint supply chain situation, our employees have demonstrated a high level of resilience and shown an amount of dedication towards customers and each other that deserves recognition. Therefore, we would like to thank our 6,500 employees around the globe for their continued dedication, passion and entrepreneurial spirit to solidify our leading position and ensure continuous leading-edge innovation, customer satisfaction and speed to market.
Our customers’ ambitious goals to serve communities around the globe with safe and reliable energy and to decarbonize the grid inspire us every day and we would like to thank our customers and partners for their continued trust and partnership.
As we celebrated 125 years of success this past year, we are excited about our transformational journey and continue to focus on offering leading innovative technology to our customers, expanding our strong partnerships, driving profitable growth and, thus, contributing to sustainable global development.
On behalf of all of us at Landis+Gyr, we thank you, our shareholders, for your continued support of and ownership in Landis+Gyr, and that you have joined us in driving our mission to manage energy better – together.
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