Itron reports surge in revenue

Spokane-based Itron Inc. reported record second-quarter earnings and revenues Tuesday. Company CEO LeRoy Nosbaum said the surge came from strong sales of equipment to electric utilities across the country.

Itron reported sales of $135.1 million for the second quarter, compared with $79.6 million in the second quarter of 2004.

The company’s net income jumped to $9.3 million, or 38 cents a share, from $818,000, or 4 cents a share, in the same period a year ago. Itron’s second-quarter 2005 results included a $5.9 million tax credit, however.

Excluding that tax benefit and other adjustments such as amortization and restructuring, pro forma net income reached $10.4 million, or 42 cents a share, compared with $2.3 million or 11 cents a share, in the second quarter 2004.

Itron, founded in 1977, provides automatic meter-reading systems and energy- and water-use technologies for utilities worldwide.

Record new-order bookings for Itron equipment “are evidence of the increasing momentum we are seeing in the AMR (automatic meter reading) and electricity metering markets,” Nosbaum said in a press release.

Industry analysts say the key driver has been Itron’s purchase last year of the electricity metering division of former competitor Schlumberger. The sale closed in July 2004.

“Clearly, this was a record quarter for Itron,” said analyst Alan Robinson, who watches the company for Seattle-based Delafield Hambrecht.

“Itron timed that acquisition very well to coincide with the upturn in utility spending on new equipment,” he said.

The electric utility industry nationwide is loosening purse strings to take advantage of AMR technology, Robinson said. Those solid-state units “cut costs for utilities and gives them the technology to more efficiently deploy the people who go out and read vast numbers of meters,” he said.

At the same time, Itron’s strong quarter raises the performance bar and suggests the company needs to work hard in what Robinson calls a very competitive industry.

One recent sale, announced by Itron last week, gave Robinson signs of price pressures faced by Itron and competitors selling to the electric and gas utilities. That sale, to Progress Energy, came to $120 million for 2.7 million meters to be installed over the next two years for Progress’ customers in the Carolinas and Florida.

“That was a very impressive sale,” Robinson said, “but it amounted to an average price per unit of about $44,” he said. Other sales booked by Itron in previous years, while smaller in total volume of units, came to around $50 a unit, he said.

For the full year 2005, company officials said they expect revenue to fall between $535 million and $545 million; previous guidance was $510 million to $520 million. They also are projecting pro forma earnings of $1.65 to $1.70 a share, up from earlier predictions of $1.50 to $1.55. In 2004, earnings per share were 93 cents, company spokeswoman Mima Scarpelli said.