Date of Report
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(Date of earliest event reported)
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July 18, 2018
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Wisconsin
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1-6706
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39-0143280
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(State or other
jurisdiction of
incorporation)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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Item 2.02 |
Results of Operations and Financial Condition.
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(d) |
Exhibits. The exhibit furnished herewith is as listed in the accompanying Exhibit Index.
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Exhibit No.
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Description
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(99.1)
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BADGER METER, INC.
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Date: July 18, 2018
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By:
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/s/ Richard E. Johnson
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Richard E. Johnson
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Senior Vice President – Finance and Treasurer
Chief Financial Officer
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From:
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Badger Meter, Inc.
4545 W. Brown Deer Road, Milwaukee, Wisconsin 53223
P.O. Box 245036, Milwaukee, Wisconsin 53224-9536
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For Additional Information Contact:
Investor Relations (414) 371-7276
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Net sales were a record $113,648,000 for the second quarter of 2018, a 9.1% increase from sales of $104,176,000 for the second quarter of 2017.
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Net earnings were $6,154,000 for the second quarter of 2018, a decrease of 42.0% from net earnings of $10,614,000 for the second quarter of 2017. Excluding the non-cash pension settlement charge discussed below, adjusted net earnings were a record $12,288,000 for the second quarter of 2018, a 15.8% increase from net earnings of $10,614,000 for the second quarter of 2017.
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Diluted earnings per share were $0.21 for the second quarter of 2018, a 41.7% decrease from diluted earnings per share of $0.36 for the second quarter of 2017. Excluding the non-cash pension settlement charge, adjusted diluted net earnings per share were $0.42 for the second quarter of 2018, a 16.7% increase from diluted earnings per share of $0.36 in the second quarter of 2017.
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The quarter’s results include the impact of a non-cash pension settlement charge of $8,200,000 ($6,134,000 or $0.21 per share after-tax) as the company continues to terminate its pension plan.
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Net sales were $218,689,000 for the first half of 2018, a 6.3% increase from sales of $205,782,000 for the first half of 2017.
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Net earnings for the first half of 2018 were $13,700,000, a decrease of 29.2% from net earnings of $19,363,000 in the first half of 2017. Excluding the non-cash pension settlement charge, adjusted net earnings were $19,834,000 for first half of 2018, a 2.4% increase from net earnings of $19,363,000 for the first half of 2017.
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Diluted earnings per share were $0.47 for the first half of 2018, a 29.9% decrease from diluted net earnings per share of $0.67 for the first half of 2017. Excluding the non-cash pension settlement charge, adjusted diluted earnings per share were $0.68 for the first half of 2018, a 1.5% increase from diluted earnings per share of $0.67 in the first half of 2017.
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The first half results include the impact of a non-cash pension settlement charge of $8,200,000 ($6,134,000 or $0.21 per share after tax) as the company continues to terminate its pension plan.
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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;
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the success or failure of newer Company products;
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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;
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the actions (or lack thereof) of the Company’s competitors;
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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;
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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;
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unusual weather, weather patterns or other natural phenomena, including related economic and other ancillary effects of any such events;
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economic policy changes, including but not limited to, trade policy and corporate taxation;
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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;
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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, tariffs, duties and/or lead times, and plastic resin as a result of changes in petroleum and natural gas prices;
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the Company’s ability to successfully integrate acquired businesses or products;
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changes in foreign economic conditions, particularly currency fluctuations in the United States dollar, the Euro and the Mexican peso;
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the inability to develop technologically advanced products;
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the failure of the Company’s products to operate as intended;
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the inability to protect the Company’s proprietary rights to its products;
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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;
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disruptions and other damages to information technology, other networks, operations and property (Company or third party) due to breaches in data security or any other cybersecurity attack;
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transportation delays or interruptions;
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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);
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the loss of or disruption in certain single-source suppliers; and
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changes in laws and regulations, particularly laws dealing with the content or handling of materials used in the Company's products.
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BADGER METER, INC.
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
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(in thousands, except share and earnings per share data)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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June 30,
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June 30,
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2018
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2017
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2018
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2017
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Net sales
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$113,648
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$104,176
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$218,689
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$205,782
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Cost of sales
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72,144
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63,122
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140,437
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126,078
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Gross margin
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41,504
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41,054
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78,252
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79,704
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Selling, engineering and administration
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25,153
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24,214
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51,927
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49,299
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Operating earnings
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16,351
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16,840
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26,325
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30,405
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Interest expense, net
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409
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147
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699
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325
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Other pension and postretirement costs
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8,031
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249
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8,012
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345
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Earnings before income taxes
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7,911
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16,444
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17,614
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29,735
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Provision for income taxes
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1,757
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5,830
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3,914
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10,372
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Net earnings
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$6,154
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$10,614
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$13,700
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$19,363
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Earnings per share:
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Basic
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$0.21
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$0.37
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$0.47
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$0.67
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Diluted
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$0.21
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$0.36
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$0.47
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$0.67
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Shares used in computation of earnings per share:
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Basic
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28,963,373
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28,938,451
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28,965,735
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28,938,851
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Diluted
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29,133,443
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29,097,820
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29,159,400
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29,109,675
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BADGER METER, INC.
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RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES TO GAAP PERFORMANCE MEASURES
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(in thousands, except share and earnings per share data)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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June 30,
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June 30,
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2018
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2017
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2018
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2017
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Net earnings (GAAP measure)
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$6,154
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$10,614
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$13,700
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$19,363
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Pension termination settlement charge, net of tax
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6,134
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-
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6,134
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-
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Adjusted net earnings
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$12,288
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$10,614
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$19,834
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$19,363
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Diluted earnings per share (GAAP measure)
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$0.21
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$0.36
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$0.47
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$0.67
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Pension termination settlement charge, net of tax
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0.21
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-
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0.21
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-
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Adjusted diluted earnings per share
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$0.42
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$0.36
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$0.68
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$0.67
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BADGER METER, INC.
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CONSOLIDATED CONDENSED BALANCE SHEETS
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(in thousands)
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Assets
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June 30,
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December 31,
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2018
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2017
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(Unaudited)
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Cash
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$
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12,125
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$
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11,164
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Receivables
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65,303
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58,210
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Inventories
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85,656
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85,172
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Other current assets
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5,070
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4,077
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Total current assets
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168,154
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158,623
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Net property, plant and equipment
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92,675
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93,601
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Intangible assets, at cost less accumulated amortization
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59,113
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59,326
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Other long-term assets
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10,056
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12,753
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Goodwill
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71,109
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67,424
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Total assets
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$
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401,107
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$
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391,727
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Liabilities and Shareholders' Equity
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Short-term debt
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$
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42,430
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$
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44,550
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Payables
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28,092
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28,601
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Accrued compensation and employee benefits
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9,632
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15,509
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Other liabilities
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5,473
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4,449
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Total current liabilities
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85,627
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93,109
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Deferred income taxes
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1,294
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3,434
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Long-term employee benefits and other
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25,716
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17,732
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Shareholders' equity
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288,470
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277,452
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Total liabilities and shareholders' equity
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$
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401,107
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$
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391,727
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