Itron, Inc. (ITRI - Free Report) has signed a contract with Pomerania Gas Company, one of six gas distribution companies in Poland for the supply of nearly 200,000 residential and commercial gas meters in Poland.
The Itron meters will be deployed over the next three years by the gas company. North Poland-based Pomerania Gas Company serves approximately 764,000 customers.
Following a formal tender process, Itron was chosen over other bidders given its market knowledge, industry expertise and reliable gas meters. Itron offered the best product with the right technical specifications and according to the gas company’s requirements.
Itron’s third quarter 2012 adjusted earnings were 97 cents per share compared with 92 cents in the year-earlier quarter. Adjusted earnings surpassed the Zacks Consensus Estimate of 94 cents per share.
Total revenues during the quarter fell 18.1% to $504.1 million, lagging behind the Zacks Consensus Estimate of $525 million. The decline in revenues stemmed mainly from an unfavorable $35 million impact from foreign currency translation and a further $76 million from the completion of many OpenWay projects in North America. Moreover, the Water segment’s higher revenues were offset by lower gas module shipments in North America and lesser shipments of Energy products in Asia Pacific.
Itron aims at upgrading its smart meter platform in the global arena. Recently, the company won the nation’s largest gas metering contract from Southern California Gas Company, a subsidiary of Sempra Energy (SRE).
The company is undertaking restructuring initiatives to increase its efficiency and lower manufacturing costs. It anticipates annualized cost savings of $15 million in 2012, which is expected to further increase to $30 million in 2013.
But at the same time, Itron expects to book associated pre-tax charges in the range of $75-$80 million, a major portion of which will be incurred in the fourth quarter of 202. Therefore, higher operating expenses are likely to create margin headwinds in fiscal 2012 and first half of 2013. Moreover, the competition of the OpenWay projects is expected to impact revenues negatively in the next three quarters.
Itron currently retains a short-term Zacks Rank #4. (Sell). Stocks in the same industry that are expected to perform strongly are National Instruments Corporation
(NATI - Free Report
) and Teradyne Inc.
(TER - Free Report
) which hold a Zacks Rank #2 (Buy).
Liberty Lake, Washington-based Itron Inc., along with its subsidiaries, is one of the principal technology providers to the energy and water industries worldwide. It produces electricity, gas, water, and heat meters, data collection and utility software solutions along with various other associated metering products for residential, commercial and industrial and transmission and distribution customers.