Less than two months after LeRoy D. Nosbaum returned to the helm of Itron, action is underway to bring efficiency to the global meter maker.
The company is restructuring its manufacturing operations by closing six facilities and reducing operations at several others. Approximately 750 positions will be cut, representing 7.5 percent of the company's full-time workforce.
“This is a difficult but necessary decision that will better position Itron to succeed in today’s increasingly competitive market and create value for stockholders,” Nosbaum, CEO and president of Itron, said in a statement.
The move is expected to save $15 million by the end of 2012 and $30 million by the end of 2012.
The restructuring will also look into ditching non-core businesses, although there were no specifics as to what those might be.
"Our primary focus is on driving efficiencies in our manufacturing operations, while continuing to meet and exceed the needs of our water, gas and electric utility customers around the world," Nosbaum said. “We are confident that our disciplined approach to increasing manufacturing utilization will simplify our operations and lower our costs.”
Itron’s stock has been slipping for much of this year and is currently trading at $37.69, up more than 5 percent on Thursday’s news. The Liberty Lake, Wash.-based company also released its third-quarter earnings, reporting $616 million in revenue but a non-cash good will impairment charge of $540 million. The board of directors also authorized the repurchase of up to $100 million in stock in the next year. Many Wall Street analysts issued a “buy” rating on Thursday.
“Despite these challenges in the quarter, our core operating results were strong. I have great confidence in this company’s prospects and I am committed to making the changes necessary to realize the potential inherent in our business. I am excited to be back at Itron and to lead this great company forward,” Nosbaum said.
Itron is expected to focus on international markets, as the meter market in the U.S. is expected to slow now that stimulus funds have been handed out for smart grid projects. Earlier this year, Itron won a contract to install 1.8 million smart meters for BC Hydro. It won’t be easy, as other manufacturers such as Echelon and Landis+Gyr are already laying groundwork for potentially huge contracts in countries like Brazil and China.
Competition is stiff for the large multi-million meter contracts, but a new era of cooperation amongst meter manufacturers is taking shape. This summer, Itron and Landis+Gyr announced they would integrate their communication platforms into each other’s meters, an acknowledgement that utilities are looking for interoperability rather than proprietary systems. The world’s largest metering companies also announced a lobbying group for the industry earlier this year to shore up support, with both consumers and legislators, for smart meters.