We reiterate our Neutral recommendation on
Itron
Inc.
(
ITRI
), one of the principal technology providers to the energy and
water industries worldwide. The company 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 (C&I), and transmission
and distribution (T&D) customers.
Itron released its fourth quarter and fiscal 2011 financial
results on February 15, 2012. The company's adjusted earnings
increased 25.2% to $1.19 per share, surpassing the Zacks Consensus
Estimate of $1.00. Revenues increased 4% to $642.5 million beating
the Zacks Consensus Estimate of $587 million.
The company expects revenues in the range of $2.1 billion to
$2.3 billion for 2012. EPS is projected in the range of $3.80 to
$4.20.
Itron decided to restructure its manufacturing operations for
increasing efficiency and lowering manufacturing cost. The process
of reorganization would entail closure of projects and
consolidation of several of its manufacturing facilities. The
company will either close or sell six of its manufacturing
facilities and reduce operations in several other units.
The company's plan to restructure nearly one-third of the 31
global manufacturing locations will curtail global workforce by
7.5% and help the company achieve annualized cost savings of $15
million in 2012 from streamlining; projected to grow to $30 million
in 2013.
However, the reorganizing operations would incur pre-tax
restructuring charges in the range of $75-$80 million; of which the
company expects to pay a considerable portion throughout 2012 and
the first half of 2013. Therefore, operating expenses will
increase, creating margin headwinds in 2012 and first half of
2013.
Itron faces tough competition from a large number of companies
offering similar products, systems, and services. Some of its
well-known competitors include
General Electric Company
(
GE
),
Cooper Industries Ltd.
(
CBE
) and
Badger Meter Inc.
(
BMI
).
We currently have a long-term Neutral recommendation on Itron.
The stock retains a short-term Zacks #3 Rank (Hold).
BADGER METER (
BMI
): Free Stock Analysis Report
COOPER INDS PLC (
CBE
): Free Stock Analysis Report
GENL ELECTRIC (
GE
): Free Stock Analysis Report
ITRON INC (
ITRI
): Free Stock Analysis Report
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