Last week, Itron Inc. (ITRI) reported third-quarter earnings of 45 cents per share, below the Zacks Consensus Estimate of 51 cents and 44% lower than the prior-year level. Earnings disappointment was primarily a result of uncertainty surrounding stimulus fund allocation and unfavorable foreign currency exchange rates.
Quarterly revenue of $408.4 million was down 15.8% from $484.8 million in the third quarter of 2008. Itron North America revenue was 22% lower than that in the comparable quarter of 2008 due to the completion of a number of AMR contracts in 2008 and fewer electric meters shipped during the quarter as customers delayed orders due to uncertainty regarding the stimulus bill.
International revenues fell 12% from the year-ago level. Majority of this decline was caused by the unfavorable impact of foreign exchange rates. The other factors leading to lower international revenue were the completion of a smart metering/AMI project in 2008 and weak demand in some markets primarily in Eastern Europe, South Africa and South America.
The company had a total backlog of $1.6 billion at the end of third quarter. This includes a twelve month backlog of $749 million, which was higher than the previous year’s level of $436 million, due to the inclusion of third quarter 2010 AMI shipments in the current twelve month backlog.
The company expects increased revenue in the fourth quarter due to installation of its AMI products. Itron expects higher North American sales for 2010, driven by the rollouts of booked AMI projects as well as additional expected new contracts resulting from the recently announced stimulus awards.
However, Itron continues to witness soft demand in its international business. The company believes that the current uncertain financial and economic conditions in some of the countries will continue into next year.
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