Itron, Inc. (ITRI - Analyst Report) has won the nation’s largest gas metering contract for supplying roughly 1.5 million of its gas meters and more than 600,000 gas regulators to the Southern California Gas Company (SoCalGas). The installation will start from fourth-quarter fiscal 2012. The company’s shares jumped 5% to close at $43.96 yesterday.
SoCalGas is a regulated subsidiary of Sempra Energy (SRE - Analyst Report). It is a leading natural gas distribution utility, providing safe and reliable energy to 20.9 million consumers through 5.8 million meters in Central and Southern California, from Visalia to the Mexican border.
The contract further includes at least 1.2 million residential gas meters in addition to 200,000 residential curb meters and 50,000 light commercial meters for accurate measurement of gas usage as well as 500,000 regulators and 105,000 curb regulators.
Itron has designed the curb meters as well as the regulators specially to meet the requirements put forward by SoCalGas. The gas meters with advanced design for efficient deployment provide up-to-date solutions to curb metering.
Itron has been providing its efficient metering technologies in empowering utilities to better manage resources for a sustainable future. Moreover, gas remains the most profitable area of the company followed by water and energy.
Earlier, in July, the company won a three year contract from Turkey’s largest private gas utility, AKSA to supply gas meters (residential, commercial and industrial) to twenty different regions of Turkey covered by AKSA.
Itron is also undertaking restructuring initiatives to increase its efficiency and lowering manufacturing costs. Under the restructuring plans, the company intends to close projects or consolidate several manufacturing facilities.
As a result of these restructuring activities, the company anticipates annualized cost savings of $15 million in 2012, which is expected to further increase to $30 million in 2013. However, it expects to book associated pre-tax charges in the range of $75-$80 million, a major portion of which is expected to be incurred in 2012. Higher operating expenses are likely to create margin headwinds in 2012 and first half of 2013.
Based in Liberty Lake, Washington, Itron Inc., along with its subsidiaries, is one of the principal technology providers to the energy and water industries worldwide. The company’s broad product portfolio includes electricity, water, gas and thermal energy measurement and control technology along with communications systems, software and professional services.
Itron retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.