Large accelerated filer | ý | Accelerated filer | ¨ | ||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | o |
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Item 6 | ||
• | the continued shift in the Company’s business from lower cost, manually read meters toward more expensive, value-added automatic meter reading (AMR) systems, advanced metering infrastructure (AMI) systems and advanced metering analytics (AMA) systems that offer more comprehensive solutions to customers’ metering needs; |
• | the success or failure of newer Company products; |
• | changes in competitive pricing and bids in both the domestic and foreign marketplaces, and particularly in continued intense price competition on government bid contracts for lower cost, manually read meters; |
• | the actions (or lack thereof) of the Company’s competitors; |
• | changes in the Company’s relationships with its alliance partners, primarily its alliance partners that provide radio solutions, and particularly those that sell products that do or may compete with the Company’s products; |
• | changes in the general health of the United States and foreign economies, including to some extent such things as the length and severity of global economic downturns, international or civil conflicts that affect international trade, the ability of municipal water utility customers to authorize and finance purchases of the Company’s products, the Company’s ability to obtain financing, housing starts in the United States, and overall industrial activity; |
• | unusual weather, weather patterns or other natural phenomena, including related economic and other ancillary effects of any such events; |
• | economic policy changes, including but not limited to, trade policy and corporate taxation; |
• | the timing and impact of government funding programs that stimulate national and global economies, as well as the impact of government budget cuts or partial shutdowns of governmental operations; |
• | changes in the cost and/or availability of needed raw materials and parts, such as volatility in the cost of brass castings as a result of fluctuations in commodity prices, particularly for copper and scrap metal at the supplier level, foreign-sourced electronic components as a result of currency exchange fluctuations and/or lead times, and plastic resin as a result of changes in petroleum and natural gas prices; |
• | the Company’s ability to successfully integrate acquired businesses or products; |
• | changes in foreign economic conditions, particularly currency fluctuations in the United States dollar, the Euro and the Mexican peso; |
• | the inability to develop technologically advanced products; |
• | the failure of the Company’s products to operate as intended; |
• | the inability to protect the Company’s proprietary rights to its products; |
• | the Company’s expanded role as a prime contractor for providing complete technology systems to governmental entities, which brings with it added risks, including but not limited to, the Company’s responsibility for subcontractor performance, additional costs and expenses if the Company and its subcontractors fail to meet the timetable agreed to with the governmental entity, and the Company’s expanded warranty and performance obligations; |
• | disruptions and other damages to information technology and other networks and operations due to breaches in data security or any other cybersecurity attack; |
• | transportation delays or interruptions; |
• | violations or alleged violations of the U.S. Foreign Corrupt Practices Act (FCPA) or other anti-corruption laws and the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act (referred to as FATCA); |
• | the loss of or disruption in certain single-source suppliers; and |
• | changes in laws and regulations, particularly laws dealing with the content or handling of materials used in the Company's products. |
March 31, | December 31, | ||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Assets | 2018 | 2017 | |||||
Current assets: | |||||||
Cash | $ | 13,532 | $ | 11,164 | |||
Receivables | 63,372 | 58,210 | |||||
Inventories: | |||||||
Finished goods | 22,668 | 23,125 | |||||
Work in process | 19,012 | 22,035 | |||||
Raw materials | 43,448 | 40,012 | |||||
Total inventories | 85,128 | 85,172 | |||||
Prepaid expenses and other current assets | 4,728 | 4,077 | |||||
Total current assets | 166,760 | 158,623 | |||||
Property, plant and equipment, at cost | 215,512 | 212,485 | |||||
Less accumulated depreciation | (121,979 | ) | (118,884 | ) | |||
Net property, plant and equipment | 93,533 | 93,601 | |||||
Intangible assets, at cost less accumulated amortization | 57,468 | 59,326 | |||||
Other assets | 9,226 | 9,897 | |||||
Deferred income taxes | 855 | 2,856 | |||||
Goodwill | 67,424 | 67,424 | |||||
Total assets | $ | 395,266 | $ | 391,727 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 48,170 | $ | 44,550 | |||
Payables and other current liabilities | 24,300 | 28,601 | |||||
Accrued compensation and employee benefits | 9,375 | 15,509 | |||||
Warranty and after-sale costs | 3,702 | 3,367 | |||||
Income and other taxes | 3,003 | 1,082 | |||||
Total current liabilities | 88,550 | 93,109 | |||||
Other long-term liabilities | 11,324 | 4,073 | |||||
Deferred income taxes | 1,546 | 3,434 | |||||
Accrued non-pension postretirement benefits | 5,834 | 5,703 | |||||
Other accrued employee benefits | 7,290 | 7,956 | |||||
Commitments and contingencies (Note 6) | |||||||
Shareholders’ equity: | |||||||
Common stock | 37,177 | 37,165 | |||||
Capital in excess of par value | 32,870 | 32,182 | |||||
Reinvested earnings | 247,866 | 244,224 | |||||
Accumulated other comprehensive loss | (10,411 | ) | (10,893 | ) | |||
Less: Employee benefit stock | (461 | ) | (460 | ) | |||
Treasury stock, at cost | (26,319 | ) | (24,766 | ) | |||
Total shareholders’ equity | 280,722 | 277,452 | |||||
Total liabilities and shareholders’ equity | $ | 395,266 | $ | 391,727 |
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited) | ||||||||
(In thousands except share and per share amounts) | ||||||||
2018 | 2017 | |||||||
Net sales | $ | 105,041 | $ | 101,606 | ||||
Cost of sales | 68,293 | 62,956 | ||||||
Gross margin | 36,748 | 38,650 | ||||||
Selling, engineering and administration | 26,774 | 25,085 | ||||||
Operating earnings | 9,974 | 13,565 | ||||||
Interest expense, net | 290 | 178 | ||||||
Other pension and postretirement (benefits) costs | (19 | ) | 96 | |||||
Earnings before income taxes | 9,703 | 13,291 | ||||||
Provision for income taxes | 2,157 | 4,542 | ||||||
Net earnings | $ | 7,546 | $ | 8,749 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.26 | $ | 0.30 | ||||
Diluted | $ | 0.26 | $ | 0.30 | ||||
Dividends declared per common share | $ | 0.130 | $ | 0.115 | ||||
Shares used in computation of earnings per share: | ||||||||
Basic | 28,932,787 | 28,900,702 | ||||||
Impact of dilutive securities | 217,259 | 182,279 | ||||||
Diluted | 29,150,046 | 29,082,981 |
Three Months Ended | |||||||
March 31, | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
2018 | 2017 | ||||||
Net earnings | $ | 7,546 | $ | 8,749 | |||
Other comprehensive income: | |||||||
Foreign currency translation adjustment | 421 | 291 | |||||
Pension and postretirement benefits, net of tax | 61 | 83 | |||||
Comprehensive income | $ | 8,028 | $ | 9,123 |
Three Months Ended | |||||||
March 31 | |||||||
(Unaudited) (In thousands) | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net earnings | $ | 7,546 | $ | 8,749 | |||
Adjustments to reconcile net earnings to net cash provided by operations: | |||||||
Depreciation | 3,175 | 2,918 | |||||
Amortization | 3,537 | 2,945 | |||||
Deferred income taxes | 1 | (12 | ) | ||||
Noncurrent employee benefits | 94 | 115 | |||||
Stock-based compensation expense | 471 | 366 | |||||
Changes in: | |||||||
Receivables | (4,919 | ) | (5,958 | ) | |||
Inventories | 265 | 7,423 | |||||
Prepaid expenses and other assets | (1,586 | ) | (2,819 | ) | |||
Liabilities other than debt | (1,809 | ) | (1,319 | ) | |||
Total adjustments | (771 | ) | 3,659 | ||||
Net cash provided by operations | 6,775 | 12,408 | |||||
Investing activities: | |||||||
Property, plant and equipment expenditures | (3,043 | ) | (3,806 | ) | |||
Acquisitions, net of cash acquired and future payments | — | (200 | ) | ||||
Net cash used for investing activities | (3,043 | ) | (4,006 | ) | |||
Financing activities: | |||||||
Net increase in short-term debt | 3,500 | 126 | |||||
Dividends paid | (3,770 | ) | (3,336 | ) | |||
Proceeds from exercise of stock options | 231 | 654 | |||||
Repurchase of treasury stock | (1,619 | ) | (2,242 | ) | |||
Issuance of treasury stock | 65 | 89 | |||||
Net cash used for financing activities | (1,593 | ) | (4,709 | ) | |||
Effect of foreign exchange rates on cash | 229 | 280 | |||||
Increase in cash | 2,368 | 3,973 | |||||
Cash – beginning of period | 11,164 | 7,338 | |||||
Cash – end of period | $ | 13,532 | $ | 11,311 |
Three months ended | |||||||
March 31, | |||||||
(In thousands) | 2018 | 2017 | |||||
Balance at beginning of period | $ | 3,367 | $ | 2,779 | |||
Net additions charged to earnings | 1,041 | 752 | |||||
Adjustments to pre-existing warranties | (53 | ) | (394 | ) | |||
Costs incurred | (653 | ) | (589 | ) | |||
Balance at end of period | $ | 3,702 | $ | 2,548 |
Defined pension plan benefits | Other postretirement benefits | ||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Service cost – benefits earned during the year | $ | 29 | $ | 24 | $ | 34 | $ | 35 | |||||||
Interest cost on projected benefit obligations | 95 | 318 | 48 | 51 | |||||||||||
Expected return on plan assets | (244 | ) | (402 | ) | — | — | |||||||||
Amortization of prior service cost | — | — | (6 | ) | (6 | ) | |||||||||
Amortization of net loss | 88 | 135 | — | — | |||||||||||
Net periodic benefit (income) cost | $ | (32 | ) | $ | 75 | $ | 76 | $ | 80 |
(In thousands) | Unrecognized pension and postretirement benefits | Foreign currency | Total | ||||||||
Balance at beginning of period | $ | (11,597 | ) | $ | 704 | $ | (10,893 | ) | |||
Other comprehensive income before reclassifications | — | 421 | 421 | ||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax of $(21) | 61 | — | 61 | ||||||||
Net current period other comprehensive income, net of tax | 61 | 421 | 482 | ||||||||
Accumulated other comprehensive (loss) income | $ | (11,536 | ) | $ | 1,125 | $ | (10,411 | ) |
(In thousands) | Amount reclassified from accumulated other comprehensive loss | ||
Amortization of pension and postretirement benefits items: | |||
Prior service benefit (1) | $ | (6 | ) |
Amortization of actuarial loss (1) | 88 | ||
Total before tax | 82 | ||
Income tax benefit | (21 | ) | |
Amount reclassified out of accumulated other comprehensive loss | $ | 61 |
(In thousands) | Unrecognized pension and postretirement benefits | Foreign currency | Total | ||||||||
Balance at beginning of period | $ | (10,495 | ) | $ | (1,140 | ) | $ | (11,635 | ) | ||
Other comprehensive income before reclassifications | — | 291 | 291 | ||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax of $(46) | 83 | — | 83 | ||||||||
Net current period other comprehensive income, net of tax | 83 | 291 | 374 | ||||||||
Accumulated other comprehensive loss | $ | (10,412 | ) | $ | (849 | ) | $ | (11,261 | ) |
(In thousands) | Amount reclassified from accumulated other comprehensive loss | ||
Amortization of pension and postretirement benefits items: | |||
Prior service benefit (1) | $ | (6 | ) |
Amortization of actuarial loss (1) | 135 | ||
Total before tax | 129 | ||
Income tax benefit | (46 | ) | |
Amount reclassified out of accumulated other comprehensive loss | $ | 83 |
(1) | These accumulated other comprehensive loss components are included in the computation of net periodic benefit (income) cost in Note 3 “Employee Benefit Plans.” |
Three Months Ended | |||
March 31, 2018 | |||
Revenues: | |||
United States | $ | 91,153 | |
Foreign: | |||
Asia | 1,700 | ||
Canada | 3,260 | ||
Europe | 5,047 | ||
Mexico | 623 | ||
Middle East | 2,152 | ||
Other | 1,106 | ||
Total | $ | 105,041 |
Three Months Ended | |||
March 31, 2018 | |||
Revenue recognized over time | $ | 2,687 | |
Revenue recognized at a point in time | 102,354 | ||
Total | $ | 105,041 |
March 31, 2018 | December 31, 2017 | ||||||
Receivables | $ | 63,372 | $ | 58,210 | |||
Contract liabilities | $ | 10,620 | $ | 9,670 |
Exhibit No. | Description | |
31.1 | ||
31.2 | ||
32 | ||
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Condensed Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Condensed Statements of Cash Flows, (v) Notes to Unaudited Consolidated Condensed Financial Statements, tagged as blocks of text and (vi) document and entity information. |
BADGER METER, INC. | ||||
Dated: April 24, 2018 | By | /s/ Richard A. Meeusen | ||
Richard A. Meeusen | ||||
Chairman, President and Chief Executive Officer | ||||
By | /s/ Richard E. Johnson | |||
Richard E. Johnson | ||||
Senior Vice President – Finance, Chief Financial Officer and Treasurer | ||||
By | /s/ Beverly L. P. Smiley | |||
Beverly L. P. Smiley | ||||
Vice President – Controller |
1. | I have reviewed this Quarterly Report on Form 10-Q of Badger Meter, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | April 24, 2018 | By | /s/ Richard A. Meeusen | ||||
Richard A. Meeusen | |||||||
Chairman, President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Badger Meter, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | April 24, 2018 | By | /s/ Richard E. Johnson | ||||
Richard E. Johnson | |||||||
Senior Vice President - Finance, Chief Financial Officer and Treasurer |
Dated: | April 24, 2018 | By | /s/ Richard A. Meeusen | ||||
Richard A. Meeusen | |||||||
Chairman, President and Chief Executive Officer | |||||||
By | /s/ Richard E. Johnson | ||||||
Richard E. Johnson | |||||||
Senior Vice President - Finance, Chief Financial Officer and Treasurer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 10, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BADGER METER INC | |
Entity Central Index Key | 0000009092 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,113,932 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Statement [Abstract] | ||
Net sales | $ 105,041 | $ 101,606 |
Cost of sales | 68,293 | 62,956 |
Gross margin | 36,748 | 38,650 |
Selling, engineering and administration | 26,774 | 25,085 |
Operating earnings | 9,974 | 13,565 |
Interest expense, net | 290 | 178 |
Other pension and postretirement benefits (costs) | (19) | 96 |
Earnings before income taxes | 9,703 | 13,291 |
Provision for income taxes | 2,157 | 4,542 |
Net earnings | $ 7,546 | $ 8,749 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.26 | $ 0.30 |
Diluted (in dollars per share) | 0.26 | 0.30 |
Dividends declared per common share (in dollars per share) | $ 0.130 | $ 0.115 |
Shares used in computation of earnings per share: | ||
Basic (in shares) | 28,932,787 | 28,900,702 |
Impact of dilutive securities (in shares) | 217,259 | 182,279 |
Diluted (in shares) | 29,150,046 | 29,082,981 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 7,546 | $ 8,749 |
Other comprehensive income: | ||
Foreign currency translation adjustment | 421 | 291 |
Pension and postretirement benefits, net of tax | 61 | 83 |
Comprehensive income | $ 8,028 | $ 9,123 |
Additional Financial Information Disclosures |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Financial Information Disclosures | Additional Financial Information Disclosures The consolidated condensed balance sheet at December 31, 2017 was derived from amounts included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Refer to the footnotes to the financial statements included in that report for a description of the Company’s accounting policies and for additional details of the Company’s financial condition. The details in those notes have not changed except as discussed below and as a result of normal adjustments in the interim. Warranty and After-Sale Costs The Company estimates and records provisions for warranties and other after-sale costs in the period in which the sale is recorded, based on a lag factor and historical warranty claim experience. After-sale costs represent a variety of activities outside of the written warranty policy, such as investigation of unanticipated problems after the customer has installed the product, or analysis of water quality issues. Changes in the Company’s warranty and after-sale costs reserve are as follows:
|
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited consolidated condensed financial statements of Badger Meter, Inc. (the “Company” or “Badger Meter”) contain all adjustments (consisting only of normal recurring accruals except as otherwise discussed) necessary to present fairly the Company’s consolidated condensed financial position at March 31, 2018, results of operations for the three-month periods ended March 31, 2018 and 2017, comprehensive income for the three-month periods ended March 31, 2018 and 2017, and cash flows for the three-month periods ended March 31, 2018 and 2017. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Employee Benefit Plans |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The Company maintains a non-contributory defined benefit pension plan that covers substantially all U.S. employees who were employed at December 31, 2011. After that date, no further benefits are being accrued in this plan. For the frozen pension plan, benefits are based primarily on years of service and, for certain plans, levels of compensation. The Company plans to terminate the pension plan in 2018, but there will be no accounting recognition until the final disposition of assets occurs. The Company also maintains supplemental non-qualified plans for certain officers and other key employees, and an Employee Savings and Stock Option Plan (“ESSOP”) for the majority of the U.S. employees. The Company additionally has a postretirement healthcare benefit plan that provides medical benefits for certain U.S. retirees and eligible dependents hired prior to November 1, 2004. Employees are eligible to receive postretirement healthcare benefits upon meeting certain age and service requirements. No employees hired after October 31, 2004 are eligible to receive these benefits. This plan requires employee contributions to offset benefit costs. The following table sets forth the components of net periodic benefit (income) cost for the three months ended March 31, 2018 and 2017 based on December 31, 2017 and 2016 actuarial measurement dates, respectively:
The Company disclosed in its financial statements for the year ended December 31, 2017 that it was not required to make a minimum contribution to the defined benefit pension plan for the 2018 calendar year. The Company believes that no additional contributions will be required during 2018. The Company also disclosed in its financial statements for the year ended December 31, 2017 that it estimated it would pay $0.4 million in other postretirement benefits in 2018 based on actuarial estimates. As of March 31, 2018, $71,500 of such benefits have been paid. The Company continues to believe that its estimated payments for the full year are reasonable. However, such estimates contain inherent uncertainties because cash payments can vary significantly depending on the timing of postretirement medical claims and the collection of the retirees’ portion of certain costs. Note that the amount of benefits paid in calendar year 2018 will not impact the expense for postretirement benefits for 2018. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Components of and changes in accumulated other comprehensive loss at March 31, 2018 are as follows:
Details of reclassifications out of accumulated other comprehensive loss during the three months ended March 31, 2018 are as follows:
(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit (income) cost in Note 3 “Employee Benefit Plans.” Components of and changes in accumulated other comprehensive loss at March 31, 2017 are as follows:
Details of reclassifications out of accumulated other comprehensive loss during the three months ended March 31, 2017 are as follows:
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Acquisitions |
3 Months Ended |
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Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On November 1, 2017, the Company acquired certain assets of Utility Metering Services, Inc.'s business Carolina Meter & Supply ("Carolina Meter") of Wilmington, North Carolina, which was one of the Company's distributors serving North Carolina, South Carolina and Virginia. The total purchase consideration for the Carolina Meter assets was $6.2 million, which included $2.0 million in cash and settlement of $4.2 million of pre-existing Company receivables. The Company's preliminary allocation of the purchase price at December 31, 2017 included $0.6 million of receivables, $0.3 million of inventory, $3.3 million of intangibles and $2.0 million of goodwill. The intangible assets acquired are primarily customer relationships with an estimated average useful life of 12 years. The preliminary allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of March 31, 2018, the Company had not completed its analysis for estimating the fair value of the assets acquired. The Carolina Meter acquisition was accounted for under the purchase method, and accordingly, the results of operations were included in the Company's financial statements from the date of acquisition. The acquisition did not have a material impact on the Company's consolidated financial statements or the notes thereto. On May 1, 2017, the Company acquired 100% of the outstanding common stock of D-Flow Technology AB ("D-Flow") of Luleå, Sweden. The D-Flow acquisition facilitates the continued advancement of the existing E-Series® ultrasonic product line while also adding a technology center for the Company. The purchase price was approximately $23.2 million in cash, plus a small working capital adjustment. The purchase price included $5.4 million in payments that are anticipated to be made in 2018 which are recorded in payables and other current liabilities on the Consolidated Balance Sheets at March 31, 2018. The Company's preliminary allocation of the purchase price included approximately $0.3 million in receivables, $0.6 million in inventory, $0.2 million in property, plant and equipment, $10.9 million of intangibles and $16.1 million of goodwill. The majority of the intangible assets acquired related to ultrasonic technology. The Company also assumed $4.9 million of liabilities as part of the acquisition. As of March 31, 2018, the Company has completed its analysis for estimating the fair value of the assets acquired with no additional adjustments. The D-Flow acquisition was accounted for under the purchase method, and accordingly, the results of operations were included in the Company's financial statements from the date of acquisition. The acquisition did not have a material impact on the Company's consolidated condensed financial statements or the notes thereto. |
Contingencies, Litigation and Commitments |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies, Litigation and Commitments | Contingencies, Litigation and Commitments In the normal course of business, the Company is named in legal proceedings. There are currently no material legal proceedings pending with respect to the Company. The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances with respect to specific matters or with respect to sites formerly or currently owned or operated by the Company, off-site disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the Company and such amounts could be material. Expenditures for compliance with environmental control provisions and regulations during 2017 and the first quarter of 2018 were not material. The Company relies on single suppliers for most brass castings and certain resin and electronic subassemblies in several of its product lines. The Company believes these items would be available from other sources, but that the loss of certain suppliers would result in a higher cost of materials, delivery delays, short-term increases in inventory and higher quality control costs in the short term. The Company attempts to mitigate these risks by working closely with key suppliers, purchasing minimal amounts from alternative suppliers and by purchasing business interruption insurance where appropriate. The Company reevaluates its exposures on a periodic basis and makes adjustments to reserves as appropriate. |
Income Taxes |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes as a percentage of earnings before income taxes for the first quarter of 2018 was 22.2% compared to 34.2% in the first quarter of 2017. Interim provisions are tied to an estimate of the overall annual rate which can vary due to state taxes and the relationship of foreign and domestic earnings. These items cause variations between periods. The decrease between years was due almost entirely to the lower Federal tax rate, which declined from 35% in 2017 to 21% in 2018 as a result of U.S. tax reform that was enacted in December 2017. For the three months ended March 31, 2018 and 2017, the Company recognized a discrete tax benefit related to the excess tax benefits from stock-based compensation of $0.3 million and $0.2 million, respectively. In December 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. For the three months ended March 31, 2018, the Company did not update the provisional amount of transition tax recorded as of December 31, 2017, as there was no new information that would materially impact the Company’s consolidated financial statements. The Company will continue to monitor any new guidance and update its transition tax calculation in a later quarter if necessary. Additional work is still needed for a more detailed analysis of the Company's deferred tax assets and liabilities and its historical foreign earnings, as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter that the analysis is completed. The Company is subject to numerous other provisions of the Act that were effective for tax years starting after December 31, 2017. These provisions include the Global Intangible Low-Taxed Income Tax inclusion, the deduction for Foreign-Derived Intangible Income, the business interest expense deduction limitation under Section 163(j), the executive compensation provision under Section 162(m), and the reduced deduction for certain meals and entertainment related expenses. The Company will continue to refine its computation related to these provisions as additional guidance becomes available. The net impact of these provisions is not expected to have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements of Financial Instruments |
3 Months Ended |
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Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Financial Instruments | Fair Value Measurements of Financial Instruments The Company applies the accounting standards for fair value measurements and disclosures for its financial assets and financial liabilities. The carrying amounts of cash, receivables and payables in the financial statements approximate their fair values due to the short-term nature of these financial instruments. Short-term debt is comprised of notes payable drawn against the Company's lines of credit and commercial paper. Because of its short-term nature, the carrying amount of the short-term debt also approximates fair value. Included in other assets are insurance policies on various individuals who were associated with the Company. The carrying amounts of these insurance policies approximate their fair value. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluates subsequent events at the date of the balance sheet as well as conditions that arise after the balance sheet date but before the financial statements are issued. The effects of conditions that existed at the balance sheet date are recognized in the financial statements. Events and conditions arising after the balance sheet date but before the financial statements are issued are evaluated to determine if disclosure is required to keep the financial statements from being misleading. To the extent such events and conditions exist, if any, disclosures are made regarding the nature of events and the estimated financial effects for those events and conditions. For purposes of preparing the accompanying consolidated condensed financial statements and the notes to these financial statements, the Company evaluated subsequent events through the date the accompanying financial statements were issued. On April 2, 2018, the Company acquired 100% of the outstanding stock of Innovative Metering Solutions, Inc. ("IMS") of Odessa, Florida, which was one of the Company's distributors serving Florida. The purchase consideration was approximately $8.5 million. The IMS acquisition will be accounted for under the purchase method, and accordingly, the results of operations will be included in the Company's financial statements from the date of acquisition. The acquisition will not have a material impact on the Company's consolidated financial statements or the notes thereto. |
New Pronouncements |
3 Months Ended |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
New Pronouncements | New Pronouncements In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220)." Under existing U.S. generally accepted accounting principles, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in this ASU also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption in any period is permitted. The Company’s provisional adjustments recorded in 2017 to account for the impact of the Tax Cuts and Jobs Act resulted in stranded tax effects. The Company is currently evaluating the timing and impact of adopting ASU 2018-02. In May 2017, the FASB issued ASU 2017-09 “Compensation - Stock Compensation (Topic 718),” which clarifies when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before and after a change to the terms and conditions of the award. The new guidance was adopted on a prospective basis on January 1, 2018. The adoption of this standard did not have an impact on the Company's consolidated financial statements. In March 2017, the FASB issued ASU 2017-07 “Compensation - Retirement Benefits (Topic 715),” which changes the presentation of defined benefit and post-retirement benefit plan expense on the income statement by requiring separation between operating and non-operating expense. Under the ASU, the service cost of net periodic benefit expense is an operating expense that will be reported with similar compensation costs. The non-operating components, which include all other components of net periodic benefit expense, are reported outside of operating income. The ASU also stipulates that only the service cost component of pension and postretirement (benefits) costs is eligible for capitalization. The ASU was adopted by the Company on January 1, 2018. Application was done retrospectively for the presentation of the components of these (benefits) costs. In the Consolidated Statements of Operations, the Company previously recorded service and other (benefits) costs in operating cost and expense accounts along with compensation costs. The adoption of the standard resulted in reclassification of those (benefits) costs to the other pension and postretirement (benefits) costs line in the Consolidated Statements of Operations. Adoption of the standard reduced operating earnings for the first quarter of 2018 by $19,000 and established that amount in other pension and postretirement (benefits) costs. In the first quarter of 2017, operating earnings were increased by $0.1 million and a corresponding amount was reclassified to other pension and postretirement (benefits) costs. The specific net periodic benefit components are disclosed in Note 3 "Employee Benefit Plans." In January 2017, the FASB issued ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350)." The update requires a single-step quantitative test to measure potential impairment based on the excess of a reporting unit's carrying amount over its fair value. A qualitative assessment can still be completed first for an entity to determine if a quantitative impairment test is necessary. The ASU is effective for fiscal year 2021 and is to be adopted on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)," which requires lessees to record most leases on their balance sheets. Lessees initially recognize a lease liability (measured at the present value of the lease payments over the lease term) and a right-of-use ("ROU") asset (measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee's initial direct costs). Lessees can make an accounting policy election not to recognize ROU assets and lease liabilities for leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The ASU is effective for the Company beginning on January 1, 2019 and early adoption is permitted. The standard requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is continuing to evaluate the impact that the adoption of this guidance will have on its financial condition, results of operations and the presentation of its consolidated financial statements. The Company expects that upon adoption the most significant impact will be the recognition of right of use assets and lease liabilities for operating leases on the Company's consolidated balance sheet. In May 2014, the FASB issued ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to identify the contract(s) with the customer, to identify the performance obligations in the contract, to determine the transaction price, to allocate the transaction price to the performance obligations in the contract and to recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. During 2016, the FASB issued additional ASU’s which enhanced the originally issued guidance. These ASU’s encompassed narrow scope improvements and practical expedients along with providing further clarifications. Effective January 1, 2018, the Company adopted ASU 2014-09 using the modified retrospective method, which resulted in an immaterial impact. For a complete discussion of the adoption of ASU 2014-09, see Note 11 "Revenue Recognition." |
Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Adoption of ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)" On January 1, 2018, the Company adopted ASU 2014-09 using the modified retrospective method applied to those contracts that were not completed or substantially complete as of January 1, 2018. Results for the reporting period beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605. The Company recorded a net reduction to opening retained earnings of $0.1 million as of January 1, 2018 as a result of the cumulative impact of adopting Topic 606. The impact to revenues as a result of applying Topic 606 for the quarter ended March 31, 2018 was a decrease of $41,000. Contracts with Customers Revenue for sales of products and services is derived from contracts with customers. The products and services promised in contracts include the sale of municipal and flow instrumentation products, such as flow meters and radios, software access and other ancillary services. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract. Since the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the majority of the Company's contracts do not contain variable consideration. The Company establishes a provision for estimated warranty and returns as well as certain after sale costs as discussed in Note 2 "Additional Financial Information Disclosures." Disaggregation of Revenue In accordance with Topic 606, the Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. The Company determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606 which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors. Information regarding revenues disaggregated by geographic area is as follows (in millions):
Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in millions):
Contract Balances The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods and/or services and the Company has not transferred control of the goods and/or services. The opening and closing balances of the Company's contract liabilites and receivables are as follows:
The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables in the period ended March 31, 2018 and December 31, 2017. The amount of revenue recognized in the period that was included in the opening contract liability balance was $0.3 million. The difference between the opening and closing balances of the Company's contract liabilities was the result of a timing difference between the Company's performance and the customers' prepayments. The increased receivables balance was due to higher sales in the first quarter of 2018 compared to the fourth quarter of 2017. Generally, receivables balances are lower at year-end than at other times of the year. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of measurement in Topic 606. At contract inception, the Company assesses the products and services promised in its contracts with customers. The Company then identifies performance obligations to transfer distinct products or services to the customer. In order to identify performance obligations, the Company considers all of the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. The Company's performance obligations are satisfied at a point in time or over time as work progresses. Revenue from products and services transferred to customers at a single point in time accounted for 97.4% of net sales for the three-month period ended March 31, 2018. The majority of the Company's revenue recognized at a point in time is for the sale of municipal and flow instrumentation products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process. Revenue from services transferred to customers over time accounted for 2.6% of net sales for the three-month period ended March 31, 2018. The majority of the Company's revenue that is recognized over time relates to the BEACON AMA software as a service. As of March 31, 2018, the Company had entered into contracts where there were unsatisfied performance obligations. For contracts recorded as long-term liabilities, $8.6 million was the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that revenue recognized from satisfying those performance obligations will be approximately $1.4 million for the remainder of 2018 and $1.8 million in each year from 2019 through 2022. Significant Judgments The Company records revenue for BEACON AMA services over time as the customer benefits from the data that is provided through the Company's software. Control of an asset is therefore transferred to the customer over time, and the Company will recognize revenue for Beacon AMA services as service units are used by the customer. Revenue is recorded for various ancillary services, such as project management and training, over time as the customer benefits from the services provided. The majority of this revenue will be recognized equally throughout the contract period as the customer receives benefits from the Company's promise to provide such services. If the service is not provided evenly over the contract period, revenue will be recognized by the associated input/output method that best measures the progress towards contract completion. The Company also has contracts that include both the sale and installation of flow meters as performance obligations. In those cases, the Company records revenue for installed flow meters at the point in time when the flow meters have been accepted by the customer. The customer cannot control the use of and obtain substantially all of the benefits from the equipment until the customer has accepted the installed product. Therefore, for both the flow meter and the related installation, the Company has concluded that control is transferred to the customer upon customer acceptance of the installed flow meters. In addition, the Company has a variety of ancillary revenue streams which are minor. The types and composition of the Company's revenue streams did not materially change during the three-month period ended March 31, 2018 from year end 2017. Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. Variable consideration in contracts for the three months ended March 31, 2018 was insignificant. Transaction Price Allocation The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract's transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable price when the good or service is sold separately in similar circumstances and to similar customers. If standalone selling price is not directly observable, it is estimated using either a market adjustment or cost plus margin approach. Contract Costs The recording of assets recognized from the costs to obtain and fulfill customer contracts primarily relate to the deferral of sales commissions on the Company's BEACON AMA software arrangements. The Company's costs incurred to obtain or fulfill a contract with a customer are amortized over the period of benefit of the related revenue. The Company expenses any costs incurred immediately when the amortization period would be one year or less. These costs are recorded within selling, engineering and administration expenses. Practical Expedients For the period ended March 31, 2018, the Company elected the following practical expedients: In accordance with Subtopic 340-40 "Other Assets and Deferred Costs - Contracts with Customers," the Company elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have been one year or less. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less and contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The Company has made an accounting policy election to exclude all taxes by governmental authorities from the measurement of the transaction price. |
New Pronouncements - (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
New Pronouncements | New Pronouncements In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220)." Under existing U.S. generally accepted accounting principles, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in this ASU also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption in any period is permitted. The Company’s provisional adjustments recorded in 2017 to account for the impact of the Tax Cuts and Jobs Act resulted in stranded tax effects. The Company is currently evaluating the timing and impact of adopting ASU 2018-02. In May 2017, the FASB issued ASU 2017-09 “Compensation - Stock Compensation (Topic 718),” which clarifies when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before and after a change to the terms and conditions of the award. The new guidance was adopted on a prospective basis on January 1, 2018. The adoption of this standard did not have an impact on the Company's consolidated financial statements. In March 2017, the FASB issued ASU 2017-07 “Compensation - Retirement Benefits (Topic 715),” which changes the presentation of defined benefit and post-retirement benefit plan expense on the income statement by requiring separation between operating and non-operating expense. Under the ASU, the service cost of net periodic benefit expense is an operating expense that will be reported with similar compensation costs. The non-operating components, which include all other components of net periodic benefit expense, are reported outside of operating income. The ASU also stipulates that only the service cost component of pension and postretirement (benefits) costs is eligible for capitalization. The ASU was adopted by the Company on January 1, 2018. Application was done retrospectively for the presentation of the components of these (benefits) costs. In the Consolidated Statements of Operations, the Company previously recorded service and other (benefits) costs in operating cost and expense accounts along with compensation costs. The adoption of the standard resulted in reclassification of those (benefits) costs to the other pension and postretirement (benefits) costs line in the Consolidated Statements of Operations. Adoption of the standard reduced operating earnings for the first quarter of 2018 by $19,000 and established that amount in other pension and postretirement (benefits) costs. In the first quarter of 2017, operating earnings were increased by $0.1 million and a corresponding amount was reclassified to other pension and postretirement (benefits) costs. The specific net periodic benefit components are disclosed in Note 3 "Employee Benefit Plans." In January 2017, the FASB issued ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350)." The update requires a single-step quantitative test to measure potential impairment based on the excess of a reporting unit's carrying amount over its fair value. A qualitative assessment can still be completed first for an entity to determine if a quantitative impairment test is necessary. The ASU is effective for fiscal year 2021 and is to be adopted on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)," which requires lessees to record most leases on their balance sheets. Lessees initially recognize a lease liability (measured at the present value of the lease payments over the lease term) and a right-of-use ("ROU") asset (measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee's initial direct costs). Lessees can make an accounting policy election not to recognize ROU assets and lease liabilities for leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The ASU is effective for the Company beginning on January 1, 2019 and early adoption is permitted. The standard requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is continuing to evaluate the impact that the adoption of this guidance will have on its financial condition, results of operations and the presentation of its consolidated financial statements. The Company expects that upon adoption the most significant impact will be the recognition of right of use assets and lease liabilities for operating leases on the Company's consolidated balance sheet. In May 2014, the FASB issued ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to identify the contract(s) with the customer, to identify the performance obligations in the contract, to determine the transaction price, to allocate the transaction price to the performance obligations in the contract and to recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. During 2016, the FASB issued additional ASU’s which enhanced the originally issued guidance. These ASU’s encompassed narrow scope improvements and practical expedients along with providing further clarifications. Effective January 1, 2018, the Company adopted ASU 2014-09 using the modified retrospective method, which resulted in an immaterial impact. For a complete discussion of the adoption of ASU 2014-09, see Note 11 "Revenue Recognition." |
Additional Financial Information Disclosures (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Warranty and After-Sale Costs Reserve | Changes in the Company’s warranty and after-sale costs reserve are as follows:
|
Employee Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | The following table sets forth the components of net periodic benefit (income) cost for the three months ended March 31, 2018 and 2017 based on December 31, 2017 and 2016 actuarial measurement dates, respectively:
|
Accumulated Other Comprehensive Loss (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of and Changes in Accumulated Other Comprehensive Loss | Components of and changes in accumulated other comprehensive loss at March 31, 2018 are as follows:
Components of and changes in accumulated other comprehensive loss at March 31, 2017 are as follows:
|
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Reclassifications Out of Accumulated Other Comprehensive Loss | Details of reclassifications out of accumulated other comprehensive loss during the three months ended March 31, 2017 are as follows:
Details of reclassifications out of accumulated other comprehensive loss during the three months ended March 31, 2018 are as follows:
(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit (income) cost in Note 3 “Employee Benefit Plans.” |
Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Information regarding revenues disaggregated by geographic area is as follows (in millions):
Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Liability and Receivables | The opening and closing balances of the Company's contract liabilites and receivables are as follows:
|
Additional Financial Information Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Changes in warranty and after-sale costs reserve | ||
Balance at beginning of period | $ 3,367 | $ 2,779 |
Net additions charged to earnings | 1,041 | 752 |
Adjustments to pre-existing warranties | (53) | (394) |
Costs incurred | (653) | (589) |
Balance at end of period | $ 3,702 | $ 2,548 |
Employee Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Defined pension plan benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost – benefits earned during the year | $ 29 | $ 24 |
Interest cost on projected benefit obligations | 95 | 318 |
Expected return on plan assets | (244) | (402) |
Amortization of prior service cost | 0 | 0 |
Amortization of net loss | 88 | 135 |
Net periodic benefit cost | (32) | 75 |
Other postretirement benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost – benefits earned during the year | 34 | 35 |
Interest cost on projected benefit obligations | 48 | 51 |
Expected return on plan assets | 0 | 0 |
Amortization of prior service cost | (6) | (6) |
Amortization of net loss | 0 | 0 |
Net periodic benefit cost | $ 76 | $ 80 |
Employee Benefit Plans - Narrative (Details) - Other postretirement benefits - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated other postretirement benefits to be paid in 2017 | $ 400,000 | |
Benefits paid | $ 71,500 |
Accumulated Other Comprehensive Loss - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Amortization of pension and postretirement benefits items: | ||
Prior service benefit/cost | $ (6) | $ (6) |
Amortization of actuarial loss | 88 | 135 |
Total before tax | 82 | 129 |
Income tax benefit | (21) | (46) |
Amount reclassified out of accumulated other comprehensive loss | $ 61 | $ 83 |
Acquisitions (Details) - USD ($) $ in Thousands |
Nov. 01, 2017 |
May 01, 2017 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Business Acquisition | ||||
Goodwill | $ 67,424 | $ 67,424 | ||
Carolina Meter | ||||
Business Acquisition | ||||
Total purchase consideration | $ 6,200 | |||
Cash payment | 2,000 | |||
Pre-existing receivables acquired | $ 4,200 | |||
Receivables | 600 | |||
Inventory | 300 | |||
Intangibles | 3,300 | |||
Goodwill | $ 2,000 | |||
Carolina Meter | Customer Relationships | ||||
Business Acquisition | ||||
Estimated average useful life | 12 years | |||
D-Flow | ||||
Business Acquisition | ||||
Cash payment | $ 23,200 | |||
Receivables | 300 | |||
Inventory | 600 | |||
Intangibles | 10,900 | |||
Goodwill | $ 16,100 | |||
Outstanding common stock acquired (as a percent) | 100.00% | |||
Payments anticipated to be made within eighteen months of the purchase date | $ 5,400 | |||
Machinery and equipment | 200 | |||
Liabilities assumed as part of the acquisition | $ 4,900 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Provision for income taxes (as a percent) | 22.20% | 34.20% |
Excess tax benefits from stock-based compensation | $ 0.3 | $ 0.2 |
Subsequent Events - Narrative (Details) - Innovative Metering Solutions, Inc. - Subsequent Event $ in Millions |
Apr. 02, 2018
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Outstanding common stock acquired (as a percent) | 100.00% |
Total purchase consideration | $ 8.5 |
New Pronouncements - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating earnings | $ 9,974 | $ 13,565 |
Accounting Standards Update 2017-07 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating earnings | $ (19) | 100 |
Other pension benefits (costs) | $ 100 |
Revenue Recognition - Other Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Contract with customer, liability, revenue recognized | $ 300 | |
Accounting Standards Update 2014-09 | Retained Earnings | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of new accounting principle | $ 100 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Revenues | $ 41 |
Revenue Recognition - Disaggregation of Revenue (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Revenues | $ 105,041 |
United States | |
Disaggregation of Revenue [Line Items] | |
Revenues | 91,153 |
Asia | |
Disaggregation of Revenue [Line Items] | |
Revenues | 1,700 |
Canada | |
Disaggregation of Revenue [Line Items] | |
Revenues | 3,260 |
Europe | |
Disaggregation of Revenue [Line Items] | |
Revenues | 5,047 |
Mexico | |
Disaggregation of Revenue [Line Items] | |
Revenues | 623 |
Middle East | |
Disaggregation of Revenue [Line Items] | |
Revenues | 2,152 |
Other | |
Disaggregation of Revenue [Line Items] | |
Revenues | 1,106 |
Revenue recognized over time | |
Disaggregation of Revenue [Line Items] | |
Revenues | 2,687 |
Revenue recognized at a point in time | |
Disaggregation of Revenue [Line Items] | |
Revenues | $ 102,354 |
Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 63,372 | $ 58,210 |
Contract Liabilities | $ 10,620 | $ 9,670 |
Revenue Recognition - Performance Obligations (Details) - Consolidated Sales - Product Concentration Risk |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Revenue recognized at a point in time | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 97.40% |
Revenue recognized over time | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 2.60% |
Revenue Recognition - Unsatisfied Performance Obligations (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 1.4 |
Expected timing of performance obligation satisfaction, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 8.6 |
Expected timing of performance obligation satisfaction, period | 4 years |
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