When Itron Inc. announced its second-quarter earnings July 28, it also provided upbeat guidance on what it expects its full-year 2010 results will be, backing up President and CEO Malcolm Unsworth's statement that, "We are having a fantastic year."

Itron said that its annual revenues likely will climb in the "mid-20 percent" range this year, and if that growth turns out to be 25 percent, the Liberty Lake-based company's revenues would soar to $2.1 billion, from $1.7 billion in 2009.

Meanwhile, in a conference call with securities analysts, Unsworth provided a rundown of how well the company is doing, saying that international orders are up in spite of economic problems in Europe, and that it's seeking orders in developing countries by doing such things as providing technology that enables residents to load credits on a card at an ATM machine so they can buy natural gas.

Itron doesn't predict what its net income will be, but in its quarterly earnings release, it said it has had "record financial results, strong bookings, and record (order) backlog."

Through the first six months, the company earned $53.7 million, or $1.31 a diluted share, compared with a net loss of $4.4 million, or 12 cents a share, in the year-earlier period. In the second quarter, it booked $806 million in new orders, compared with $427 million in the year-earlier quarter. As of June 30, its total backlog stood at a record $1.7 billion, up from $1.6 billion a year earlier, and its 12-month backlog was a record $1 billion.

North American revenues for the quarter and first half were up 112 percent and 94 percent, respectively, driven primarily by increased shipments of Itron's OpenWay meters and meter modules, 1.2 million of which were shipped during the quarter, when Itron delivered its 3 millionth OpenWay unit less than three years after the products were launched. OpenWay includes automated metering infrastructure and smart-grid technology that enables two-way communication between utilities and their customers, seen as desirable technology to help utilities manage load optimally when global energy supplies are tightening.

In North America, Itron's gross margins tightened, reflecting the burgeoning shipments of OpenWay units, which cost more to produce than other technology. In Itron's international business, increased warranty accruals of $9.7 million in Sweden cut the company's profit margin by 3.6 percentage points, hurt its companywide gross margin by 1.7 percentage points, and cut 16 cents a share from earnings, Chief Financial Officer Steve Helmbrecht said in the conference call. The warranty issues, which went to arbitration, involve claims that certain of the company's meters are affected by high-frequency interference from devices in the home, which weren't anticipated when the meters were designed, but Itron believes it has corrected the problem and satisfied customers' concerns, Helmbrecht says.

Itron suffered some disappointments in the second quarter as contract awards went to other suppliers, and the company says its compensation costs have risen in 2010 as it has reinstated annual incentive pay plans.

In the international market, orders are up 38 percent since year-end, Unsworth told the analysts.

"There's no question that we will grow across the globe," he says.

In Europe, legislation that requires utilities to automate their meter reading is driving demand for smart-grid systems, Unsworth says.

Itron has been chosen by the main gas utility in France, Gaz Reseau Distribution France, to deploy a fixed data-collection system to 5,000 customers in Saint-Omer, in northern France, in one of four pilot projects for a study of a possible future mass meter deployment to 11 million residential gas customers, he says.

Also, Itron is making progress in an automated metering infrastructure pilot project for Electricite Reseau Distribution France, one of the world's largest utilities, under which 100,000 meters will be installed, Unsworth says.

An automated meter-reading project it has launched with Yorkshire Water, the largest such project in the United Kingdom, is on track and positions Itron as a leader in water automation in the U.K., where 16 million homes aren't metered, he says.

In Azerbaijan, an Itron contract to provide smart-payment gas meters has the potential to reach 1 million end users, and the first-of-its-kind contract could be a key for Itron to make sales in other developing countries, Unsworth says.

With the system, Azerbaijanis load credits onto a card at an ATM, then download the credits into the meters at their homes to buy natural gas, he says. "Once you run out of credits, you go and top it off. It is called 'the topple.'"

Such technology "is really starting to be big" in developing countries that have electricity systems, but where customers' homes don't have street addresses, Unsworth says.

In South America, a significant amount of theft from utilities, called "nontechnical losses," is driving demand for smart-payment systems, which can address such theft problems, he adds.

"We manage 5.5 million prepayment meters in South Africa," he says. "By putting what they call smart-payment systems in there, the utilities saved 40 percent of their nontechnical losses. And now we're pushing that solution to some of the developing countries in South America."

In Mumbai, India, a large automated water meter-reading project is moving forward, and in the second quarter, the company added a similar project for gas in New Delhi that has the potential to reach 500,000 homes, Unsworth says.

In the U.S., Itron is working on requests for proposals from utilities that are planning to buy metering systems, Unsworth says. "Can I give you a number? Off the top of my head, it is large. That's all I'm going to say."

He says the company has introduced a second version of its OpenWay meter that is in testing with utility customers.

On June 21, the Maryland Public Service Commission dealt a potential blow to the growth of smart-grid metering when it rejected a proposal from Baltimore Gas & Electric to deploy a $482 million system, saying BG&E had asked ratepayers to take financial and technological risks and to adapt to changes in rate design in exchange for savings that were "largely indirect, highly contingent, and a long way off." The Obama administration had provided a $200 million grant for deployment of the system. BG&E has asked for a rehearing.

Asked by a securities analyst about the BG&E case, Unsworth said, "Obviously, one of the things with Baltimore now is going to be about the consumer. So is this going to be a trend? I'm not really certain. I think what ... the commissioners are looking for is to give more information to the consumer at a reasonable cost to the consumer."

On July 28, Itron announced that New Mexico Gas Co., of Albuquerque, N.M, had contracted with it to install about 345,000 natural gas modules with advanced automated meter reading technology that would enable the company to read its meters remotely.

Itron also announced it had been selected by the city of Wadsworth, Ohio, to handle a smart-metering initiative involving both electricity and water meters.

Finally, Itron said last week that a recent study, requested by the Public Utility Commission of Texas and performed by Navigant Consulting LLC, confirmed that its OpenWay smart meters make precise measurements.

"Consumer advocacy groups in Texas and other locations across the U.S. have raised concerns that incorrect data collected by smart meters leads to higher-than-expected utility bills," Itron said. "The testing and verification efforts undertaken by Navigant demonstrate that Itron smart meters are accurately and reliably delivering meter data to utilities."