Itron gets biggest order, enjoys stock price surge

Journal of Business, Jul 28, 2005 by Ripley, Richard

Itron Inc. has corralled the biggest order in its history and has enjoyed an unusually strong surge in its stock price dfter telling Wall Street that its second-quarter earnings would be sharply higher than expected.

The stock of the Spokane-based maker of utility meter-reading equipment shot up by $4.55 a share, to close at $50.73, on July 15, one day after Itron announced its record-breaking order and projected that its quarterly earnings would beat analysts' estimates.

True to its word, on Tuesday, July 26, Itron reported secondquarter earnings of $9.3 million, or 38 cents a diluted share, up from $818,000, or 4 cents a share, in the year-earlier period. Earlier, its second-quarter earnings had been estimated at 35 cents a share. The company also said it now expects its fullyear earnings for 2005 will be $1.65 to $1.70 a share, well above earlier estimates of $1.50 to $1.55. Its stock traded at about $52.40 a share Tuesday afternoon.

In an interview last week, Mima Scarpelli, the company's vice president of investor relations, said, "We're having a great year."

On July 15, Itron had reported it had received its recordbreaking $120 million order from Raleigh, N.C.-based Progress Energy for 2.7 million solid-state automatic meter-reading (AMR) meters.

Even though the order from Progress Energy, one of the nation's 10 largest investor-owned electric utilities, wasn't signed in time to be included in Itron's second-quarter neworder bookings, the company still set a record in the quarter for new bookings with orders of $177 million.

"We will again set a record for bookings in the third quarter," Scarpelli says.

Progress Energy's order is unusual in that the company is replacing every meter in its territory, in North Carolina, South Carolina, and central Florida, and is putting AMR technology on all of its meters rather than on just some, Scarpelli says. She says utilities generally put AMR technology on only some of the meters in their territories at a time.

The new meters will be read electronically via radio signal, and Itron says the equipment can eliminate the need for meterreading personnel to look at the visual displays on utility meters and punch in usage-numbers. The company says that a vehicle with AMR equipment can pick up readings from 10,000 meters a day as it's driven down the street, compared with the 400 meter readings a day a meter reader can record by hand while combing a neighborhood on foot.

In addition to being Itron's largest order, the Progress Energy order is the biggest piece of business Itron has landed for the Centron electricity-meter reading technology that it acquired last year in a merger with a unit of Schlumberger Ltd., Scarpelli says.

"It's very much a technologically advanced meter compared with what's been out there In the marketplace," she says.

Itron's stock price, after shooting up July 15, remained strong last week, closing on Friday, July 22, at $51.07, up 113 percent since Jan. 1, Scarpelli says. That price was more than three times as high as the company's low of $15.93 in the previous 52 weeks.