) announced that it has collaborated with Russia-based leading
thermal energy metering and associated services company, Teplocom
Holding, to develop and market metering solutions technologies in
Russia. The collaboration agreement was signed by both the
parties during the Franco-Russian Intergovernmental Seminar, in
the presence of both Prime Ministers, Dmitry Medvedev and
The companies will work toward developing and marketing a
thermal energy meter, which will constitute Teplocom's calculator
and Itron's ultrasonic flow meter. Itron's meter data management
solution will also be customized to comply with Russian
requirements. In addition, Teplocom's products will be adapted to
Itron's data collection, data management and data utilization
systems. Furthermore, according to the agreement, Itron's
products and solutions will be distributed through Teplocom
Holding's affiliates, Trade House and Energy Complex Integrator,
Itron reported third-quarter 2012 adjusted earnings of 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 revenue during the quarter fell 18.1% to $504.1 million,
lagging the Zacks Consensus Estimate of $525 million. The decline
in revenues was mainly due to 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, higher revenues from the Water segment were offset by
lower gas module shipments in North America and lesser shipments
of Energy products in Asia Pacific.
The company expects to generate revenue in the range of $2.1
billion to $2.15 billion for 2012. It expects adjusted earnings
to lie within the band of $3.60-$3.80 per share.
With increasing regulations mandating increasing energy
efficiency, the Russian market is going through major changes,
which call for high-end and multi-energy solutions. The
Itron-Teplocom partnership will capitalize on the growing demand
for high-end water and thermal energy metering products and
systems in the Russian metering market.
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
The company is undertaking a number of restructuring
initiatives to increase its efficiency and lower manufacturing
costs. It anticipates annualized cost savings of $15 million in
2012, which may further increase to $30 million in 2013.
But simultaneously, Itron expects to register associated
pre-tax charges in the range of $75-$80 million, a major portion
of which will be incurred in 2012. Therefore, higher
operating expenses are likely to create margin headwinds in 2012
and in the first half of 2013. Moreover, the competition of the
OpenWay projects is expected to impact revenues negatively in the
next three quarters.
Itron has a short-term Zacks #3 (Hold) Rank. We have a
long-term Neutral recommendation on the stock.
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