8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

_______________________

Date of Report
(Date of earliest event reported)	October 17, 2019

BADGER METER INC

(Exact name of registrant as specified in its charter)

Wisconsin	001-06706	39-0143280
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4545 W. Brown Deer Rd., Milwaukee, Wisconsin 53223

(Address of principal executive offices, including zip code)

(414) 355-0400

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BMI	New York Stock Exchange LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition .

On October 17, 2019, Badger Meter, Inc. (the “Company”) issued a press release announcing its quarterly financial results for the 2019 third quarter ended September 30, 2019.

A copy of the press release issued by the Company announcing the foregoing is furnished herewith as Exhibit 99.1.

Item 9.01 
Financial Statements and Exhibits .

(a)	Not applicable.
(b)	Not applicable.
(c)	Not applicable.
(d)	Exhibits .  The exhibit furnished herewith is as listed in the accompanying Exhibit Index.

EXHIBIT INDEX

Exhibit No.	Description
(99.1)	Badger Meter, Inc. Press Release, dated October 17, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BADGER METER, INC.
Date: October 17, 2019	By:	/s/ Robert A. Wrocklage
		Robert A. Wrocklage
		Vice President – Chief Financial Officer

EX-99.1

Exhibit 99.1

Badger Meter Reports Third Quarter 2019 Results

MILWAUKEE--(BUSINESS WIRE)--October 17, 2019--Badger Meter, Inc. (NYSE: BMI) today reported results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

• Net sales for the third quarter of 2019 were $108.6 million compared to $110.6 million in the comparable prior year quarter; domestic water utility sales increased 2% year-over-year.
• Gross profit margins remain strong at 38.4%.
• GAAP net earnings and diluted earnings per share (EPS) were $12.7 million and $0.44, respectively, compared to $2.9 million and $0.10 in the comparable prior year period.
• Excluding the impact of pension termination settlement and executive retirement charges in the prior year period, adjusted EPS was $0.44 compared to $0.46 for the third quarter of 2018. (See 2018 adjusted results in the attached GAAP to Non-GAAP reconciliation).
• $20.2 million of cash provided by operations representing solid earnings conversion.

Third Quarter Operating Results

“We were pleased with the sequential improvement in sales, with growth in the domestic municipal water market against a difficult comparison, and continued interest in our new technology products. In the latter half of the quarter, we began shipping our new three and four-inch ultrasonic meters incorporating our D-Flow technology. ORION^® LTE-M radio installations at early adopters and several key customers are ramping, while pilot testing at others continues. Our margins and cash flow results demonstrate the impact of our continuous improvement efforts. Overall, it was a solid quarter across a variety of operational and financial measures and I want to thank my Badger Meter colleagues across the globe for their efforts,” said Kenneth C. Bockhorst, President and Chief Executive Officer of Badger Meter.

Municipal water sales decreased 3% from the strong comparable prior year quarter; however, domestic municipal water sales grew by 2%. International municipal water utility sales declined as anticipated, as last year’s large Middle East order did not repeat. The domestic increase, despite a near-record comparable, was the result of solid market demand, the launch of the new three and four-inch commercial E-Series^® Ultrasonic meters and initiation of recent key customer project wins. A variety of additional customers are undergoing pilot tests of newer technologies, most notably with ORION^® Cellular LTE-M endpoints, a common practice that can result in order deferments. Sales of flow instrumentation products grew 1% year-over-year with modest increases across most industrial end markets.

Adjusted operating margins were 15.1% in the third quarter of 2019 compared to 16.1% in the comparable prior year period. Gross profit margins were strong at 38.4%, reflective of positive product and regional sales mix, as well as favorable, but moderating, price/cost dynamics. However, they declined year-over-year due entirely to the Company’s recording of a discrete warranty provision associated with a sourced system integration module for a previously installed solution sold only outside North America.

Selling, engineering and administration (“SEA”) expenses in the third quarter of 2019 totaled $25.2 million compared to an adjusted $26.1 million in the prior year. Adjusted SEA leverage improved 40 basis points to 23.2% from 23.6% in the prior year. The income tax rate of 22.1% was in line with the prior year’s adjusted 22.8%.

Cash from operations of $20.2 million increased 37% or $5.5 million year-over-year, primarily associated with improved working capital management.

Outlook

Bockhorst continued, “The municipal spending market remains healthy and we continue to be encouraged by the interest level, engagement and pilot testing of our leading technologies. As we have historically experienced, the introduction of innovative solutions in our markets can create order pauses and sales unevenness in the short-term. However, our customers contemplate the long-term in making their smart water investments and therefore, we continue to support technology and capabilities that offer improved performance and economics over that horizon.

Looking beyond demand trends, our profit margins continue to benefit from positive sales mix and continuous improvement activities across all aspects of our operations, and our balance sheet provides ample capacity to execute on disciplined, strategic acquisitions.” Bockhorst concluded, “We remain confident in our long term outlook as our broad range of proven smart-water solutions solve customer challenges and work to preserve the world’s most precious resource.”

Conference Call and Webcast Information

Badger Meter management will hold a conference call to discuss the company’s third quarter 2019 results today, Thursday October 17, 2019 at 10:00 AM CT / 11:00 AM ET. The call and related presentation can be accessed via webcast through the Investor section of our website or by dialing 1-877-823-9761 (US) or 1-647-689-5327 (Intl) and entering the passcode 6591119. The webcast will be archived on the company’s website until its next earnings release.

Safe Harbor Statement

Certain statements contained in this news release, as well as other information provided from time to time by Badger Meter (the “company”) or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those statements. The company’s results are also subject to general economic conditions, variation in demand from customers, continued market acceptance of new products, the successful integration of acquisitions, competitive pricing and operating efficiencies, supply chain risk, material and labor cost increases, tax reform and foreign currency risk. See the company’s Form 10-K filed with the SEC for further information regarding risk factors. Badger Meter disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

About Badger Meter

Badger Meter is an innovator in flow measurement, control and communications solutions, serving water utilities, municipalities, and commercial and industrial customers worldwide. The company’s products measure water, oil, chemicals, and other fluids, and are known for accuracy, long-lasting durability and for providing valuable and timely measurement data. For more information, visit badgermeter.com.

BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and earnings per share data)
		Three Months Ended				Nine Months Ended
		September 30,		September 30,		September 30,		September 30,
			2019		2018		2019		2018
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net sales		$	108,646	$	110,630	$	317,069	$	329,319
Cost of sales			66,976		66,684		194,666		207,121
Gross margin			41,670		43,946		122,403		122,198
Selling, engineering and administration			25,225		28,212		76,598		80,139
Operating earnings			16,445		15,734		45,805		42,059
Interest expense, net			66		295		280		994
Other pension and postretirement costs			41		11,787		123		19,799
Earnings before income taxes			16,338		3,652		45,402		21,266
Provision for income taxes			3,617		801		10,499		4,715
Net earnings		$	12,721	$	2,851	$	34,903	$	16,551
Earnings per share:
	Basic	$	0.44	$	0.10	$	1.20	$	0.57
	Diluted	$	0.44	$	0.10	$	1.19	$	0.57
Shares used in computation of earnings per share:
	Basic		29,013,573		28,989,205		29,022,080		28,983,115
	Diluted		29,193,338		29,197,160		29,215,192		29,181,543

BADGER METER, INC.
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES TO GAAP PERFORMANCE MEASURES
(in thousands, except share and earnings per share data)
	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
		2019		2018		2019		2018
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Selling, engineering and administration (GAAP measure)	$	25,225	$	28,212	$	76,598	$	80,139
Executive retirement charges		-		2,098		-		2,098
Adjusted selling, engineering and administration	$	25,225	$	26,114	$	76,598	$	78,041
Operating earnings (GAAP measure)	$	16,445	$	15,734	$	45,805	$	42,059
Executive retirement charges		-		2,098		-		2,098
Adjusted operating earnings	$	16,445	$	17,832	$	45,805	$	44,157
Net earnings (GAAP measure)	$	12,721	$	2,851	$	34,903	$	16,551
Executive retirement charge, net of tax		-		1,998		-		1,998
Pension termination settlement charge, net of tax		-		8,652		-		14,786
Adjusted net earnings	$	12,721	$	13,501	$	34,903	$	33,335
Diluted earnings per share (GAAP measure)	$	0.44	$	0.10	$	1.19	$	0.57
Executive retirement charge, net of tax		-		0.07		-		0.07
Pension termination settlement charge, net of tax		-		0.29		-		0.50
Adjusted diluted earnings per share	$	0.44	$	0.46	$	1.19	$	1.14

BADGER METER, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Assets	September 30,		December 31,
		2019		2018
	(Unaudited)
Cash	$	37,728	$	13,086
Receivables		61,406		66,300
Inventories		84,835		80,804
Other current assets		7,572		4,469
Total current assets		191,541		164,659
Net property, plant and equipment		86,657		90,321
Intangible assets, at cost less accumulated amortization		49,934		55,418
Other long-term assets		18,100		11,035
Goodwill		71,258		71,258
Total assets	$	417,490	$	392,691
Liabilities and Shareholders' Equity
Short-term debt	$	4,360	$	18,060
Payables		32,363		22,469
Accrued compensation and employee benefits		12,814		13,768
Other current liabilities		9,308		5,718
Total current liabilities		58,845		60,015
Deferred income taxes		3,077		3,332
Long-term employee benefits and other		31,929		25,841
Shareholders' equity		323,639		303,503
Total liabilities and shareholders' equity	$	417,490	$	392,691

BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
		2019			2018			2019			2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Operating activities:
Net earnings	$	12,721		$	2,851		$	34,903		$	16,551
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation		2,625			2,902			8,688			8,796
Amortization		3,026			3,132			9,323			9,675
Deferred income taxes		33			73			18			132
Noncurrent employee benefits		117			177			(150	)		261
Pension termination settlement charges		-			11,732			-			19,900
Contribution to pension plan		-			(1,260	)		-			(2,860	)
Stock-based compensation expense		328			2,430			882			3,374
Changes in:
Receivables		(1,473	)		(4,697	)		4,555			(11,462	)
Inventories		(1,694	)		1,242			(4,259	)		1,409
Payables		1,744			(1,213	)		10,885			(2,468	)
Prepaid expenses and other assets		(1,860	)		(2,474	)		(5,806	)		(5,573	)
Other liabilities		4,669			(213	)		2,100			2,148
Total adjustments		7,515			11,831			26,236			23,332
Net cash provided by operations		20,236			14,682			61,139			39,883
Investing activities:
Property, plant and equipment expenditures		(1,123	)		(1,977	)		(5,589	)		(7,219	)
Acquisitions, net of cash acquired and future payments		-			-			-			(8,048	)
Net cash used for investing activities		(1,123	)		(1,977	)		(5,589	)		(15,267	)
Financing activities:
Net decrease short-term debt		-			(6,433	)		(13,500	)		(8,433	)
Payment of contingent acquisition consideration		-			(2,034	)		(1,650	)		(2,034	)
Dividends paid		(4,936	)		(4,351	)		(13,652	)		(11,895	)
Proceeds from exercise of stock options		215			702			963			933
Repurchase of treasury stock		(522	)		(2,462	)		(3,359	)		(4,451	)
Issuance of treasury stock		46			98			143			529
Net cash used for financing activities		(5,197	)		(14,480	)		(31,055	)		(25,351	)
Effect of foreign exchange rates on cash		(82	)		279			147			200
Increase (decrease) in cash		13,834			(1,496	)		24,642			(535	)
Cash - beginning of period		23,894			12,125			13,086			11,164
Cash - end of period	$	37,728		$	10,629		$	37,728		$	10,629

Contacts

Karen Bauer at (414) 371-7276
kbauer@badgermeter.com

XML

Document and Entity Information	Oct. 17, 2019
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 17, 2019
Entity Registrant Name	BADGER METER INC
Entity Incorporation, State or Country Code	WI
Entity File Number	001-06706
Entity Tax Identification Number	39-0143280
Entity Address, Address Line One	4545 W. Brown Deer Rd.
Entity Address, City or Town	Milwaukee
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53223
City Area Code	414
Local Phone Number	355-0400
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000009092
Title of 12(b) Security	Common Stock
Trading Symbol	BMI
Security Exchange Name	NYSE