) 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.
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SoCalGas is a regulated subsidiary of
). 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
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.