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(Date of earliest event reported)
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(State or other
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(IRS Employer
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Item 2.02
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Results of Operations and Financial
Condition .
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Item 9.01
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Financial Statements and Exhibits .
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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: October 19, 2022
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By:
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/s/ Robert A. Wrocklage
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Robert A. Wrocklage
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Senior Vice President – Chief Financial Officer
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MILWAUKEE--(BUSINESS WIRE)--October 19, 2022--Badger Meter, Inc. (NYSE: BMI) today reported results for the third quarter ended September 30, 2022.
Third Quarter 2022 Highlights
“Badger Meter delivered another quarter of strong financial results reflecting our innovative product and software offerings, differentiated execution and durable underlying demand for smart water solutions in our served markets. In the third quarter, we achieved 15% sales growth, extending our track record to four consecutive quarters of double-digit organic revenue performance. We also delivered record EPS of $0.61, an increase of 13% year-over-year. Operating margin performance remains solid despite ongoing supply chain and inflation challenges. The resilient order pace and bid funnel bodes well for continued sales and earnings performance,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “I want to thank the global Badger Meter team for continuing to adeptly navigate the dynamic environment in support of our customers.”
Third Quarter Operating Results
Utility water sales growth was outstanding, increasing 17% year-over-year and the fourth consecutive quarter of mid-teens sales growth. Consistent with past quarters, the sales increase was broad-based and most notable in E-Series® Ultrasonic meters, ORION® Cellular endpoints and BEACON® SaaS revenue. Backlog expanded further as market demand remained strong and more than offset operational productivity that yielded higher production output.
Sales of flow instrumentation products increased 5% year-over-year, the result of solid order demand across the water-focused end market applications, partially offset by component constraints that limited manufacturing output.
Operating earnings increased 23% year-over-year, with operating profit margins expanding 100 basis points to 16.1% in the third quarter of 2022 up from the prior year’s 15.1%. Gross margin as a percent of sales was 38.9%, in the middle of the Company’s normalized range, yet as anticipated, below the prior year’s 39.8%. The cumulative impact of input cost inflation across various electronic and other components, logistics and other categories were partially offset by higher sales volumes and ongoing pricing gains.
Selling, engineering and administration (SEA) expenses in the third quarter of 2022 were $33.7 million, or 22.7% as a percent of sales, compared to $31.7 million, and 24.7% in the comparable prior year quarter. The approximately $2.0 million increase in SEA expenses was due to higher personnel costs, R&D investments and travel, while the year-over-year improvement in SEA expense leverage is the result of effective spending controls and higher sales.
The tax rate for the third quarter of 2022 was 25.1%, higher than the prior year’s 18.3% which included a discrete favorable income tax benefit related to equity compensation transactions. As a result of the above, EPS increased 13% year-over-year, to $0.61 compared to $0.54 in the comparable prior year period.
Outlook
Bockhorst added, “The demand environment remains robust as customers continue to adopt our digital smart water solutions that deliver efficiency, resiliency, and sustainability to address the variety of underlying secular challenges the water industry faces. Our success in selling our broad ‘choice-matters’ water quality and quantity offerings continue to illustrate the benefits of our differentiated, flexible and comprehensive smart water AMI solutions.
“This commercial excellence, combined with nimble execution have demonstrated our ability to navigate persistent macro challenges and drive outperformance. Our strong order pace and bid funnel, combined with the value-based pricing actions we have taken throughout this unprecedented inflationary environment, are supportive of revenue growth and margin expansion throughout economic cycles.
“Robust cash flow and ample credit availability provide us with the financial flexibility to execute our capital allocation priorities, including the recent increase in the annual dividend, and continued investments in growth.”
Bockhorst concluded, “Badger Meter is well-positioned to continue its track record of profitable growth enhanced by our innovative offerings, end market resiliency and differentiated execution. We believe this combination, along with our durable business model aligned with our vision to preserve and protect the world’s most precious resource, will generate positive shareholder value over the long term.”
Conference Call and Webcast Information
Badger Meter management will hold a conference call to discuss the Company’s third quarter 2022 results today, Wednesday October 19, 2022 at 10:00 AM Central/11:00 AM Eastern time. The webcast and related presentation can be accessed via the Investor section of our website. Participants can also register to take part in the call using this online registration link: https://www.netroadshow.com/events/login?show=ad683104&confId=42665. 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, Inc. (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. Potential factors that could affect such forward-looking statements include the possible negative impacts of COVID-19 on the global economy, the Company’s operations and those of our customers and suppliers. In addition, the Company’s results are 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 Securities and Exchange Commission for further information regarding risk factors, which are incorporated herein by reference. 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
With more than a century of water technology innovation, Badger Meter is a global provider of industry leading water solutions encompassing flow measurement, quality and other system parameters. These offerings provide our customers with the data and analytics essential to optimize their operations and contribute to the sustainable use and protection of the world’s most precious resource. For more information, visit www.badgermeter.com.
| BADGER METER, INC. | |||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | |||||||||||||
| (in thousands, except share and earnings per share data) | |||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|||||||
| Net sales |
$ |
148,009 |
|
$ |
128,738 |
$ |
418,244 |
|
$ |
369,449 |
|||
| Cost of sales |
|
90,487 |
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|
77,554 |
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255,239 |
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|
218,801 |
|||
| Gross margin |
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57,522 |
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51,184 |
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163,005 |
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|
150,648 |
|||
| Selling, engineering and administration |
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33,651 |
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31,744 |
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98,184 |
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94,786 |
|||
| Operating earnings |
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23,871 |
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|
19,440 |
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64,821 |
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|
55,862 |
|||
| Interest (income) expense, net |
|
(108 |
) |
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14 |
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(86 |
) |
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28 |
|||
| Other pension and postretirement costs |
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32 |
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|
30 |
|
97 |
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|
90 |
|||
| Earnings before income taxes |
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23,947 |
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19,396 |
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64,810 |
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|
55,744 |
|||
| Provision for income taxes |
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6,014 |
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3,541 |
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15,853 |
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|
12,136 |
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| Net earnings |
$ |
17,933 |
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$ |
15,855 |
$ |
48,957 |
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$ |
43,608 |
|||
| Earnings per share: | |||||||||||||
| Basic |
$ |
0.61 |
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$ |
0.54 |
$ |
1.68 |
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$ |
1.50 |
|||
| Diluted |
$ |
0.61 |
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$ |
0.54 |
$ |
1.67 |
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$ |
1.49 |
|||
| Shares used in computation of earnings per share: | |||||||||||||
| Basic |
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29,215,982 |
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29,157,628 |
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29,211,488 |
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29,124,491 |
|||
| Diluted |
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29,372,464 |
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29,341,832 |
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29,363,097 |
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29,324,534 |
|||
| BADGER METER, INC. | |||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | |||||
| (in thousands) | |||||
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Assets |
September 30, |
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December 31, |
||
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2022 |
|
2021 |
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| (Unaudited) | |||||
| Cash and cash equivalents |
$ |
114,787 |
$ |
87,174 |
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| Receivables |
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83,491 |
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65,866 |
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| Inventories |
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113,608 |
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99,611 |
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| Other current assets |
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13,742 |
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8,709 |
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| Total current assets |
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325,628 |
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261,360 |
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| Net property, plant and equipment |
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72,369 |
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78,050 |
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| Intangible assets, at cost less accumulated amortization |
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54,314 |
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64,176 |
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| Other long-term assets |
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22,962 |
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22,919 |
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| Goodwill |
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99,100 |
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104,313 |
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| Total assets |
$ |
574,373 |
$ |
530,818 |
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Liabilities and Shareholders' Equity |
|||||
| Payables |
$ |
65,462 |
$ |
41,859 |
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| Accrued compensation and employee benefits |
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17,734 |
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20,644 |
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| Other current liabilities |
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18,589 |
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19,643 |
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| Total current liabilities |
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101,785 |
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82,146 |
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| Deferred income taxes |
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4,575 |
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5,385 |
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| Long-term employee benefits and other |
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45,154 |
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40,217 |
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| Shareholders' equity |
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422,859 |
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403,070 |
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| Total liabilities and shareholders' equity |
$ |
574,373 |
$ |
530,818 |
|
| BADGER METER, INC. | |||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | |||||||||||||||
| (in thousands) | |||||||||||||||
|
Three Months Ended September 30, |
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Nine Months Ended September 30, |
|||||||||||||
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2022 |
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2021 |
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2022 |
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2021 |
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(Unaudited) |
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(Unaudited) |
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(Unaudited) |
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(Unaudited) |
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| Operating activities: | |||||||||||||||
| Net earnings |
$ |
17,933 |
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$ |
15,855 |
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$ |
48,957 |
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$ |
43,608 |
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|||
| Adjustments to reconcile net earnings to net cash provided by operations: | |||||||||||||||
| Depreciation |
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2,791 |
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2,756 |
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8,413 |
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8,619 |
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| Amortization |
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3,915 |
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4,270 |
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|
11,748 |
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12,358 |
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| Deferred income taxes |
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8 |
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(34 |
) |
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24 |
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11 |
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| Noncurrent employee benefits |
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(74 |
) |
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72 |
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(138 |
) |
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232 |
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| Stock-based compensation expense |
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704 |
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|
590 |
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2,170 |
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1,537 |
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|||
| Changes in: | |||||||||||||||
| Receivables |
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(6,832 |
) |
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(10,607 |
) |
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(18,860 |
) |
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(8,985 |
) |
|||
| Inventories |
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(3,184 |
) |
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(873 |
) |
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(16,207 |
) |
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(5,685 |
) |
|||
| Payables |
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3,742 |
|
|
2,054 |
|
|
23,870 |
|
|
7,420 |
|
|||
| Prepaid expenses and other current assets |
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(1,252 |
) |
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(10,389 |
) |
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(9,405 |
) |
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(11,648 |
) |
|||
| Other liabilities |
|
6,040 |
|
|
11,670 |
|
|
2,171 |
|
|
12,967 |
|
|||
| Total adjustments |
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5,858 |
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(491 |
) |
|
3,786 |
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|
16,826 |
|
|||
| Net cash provided by operations |
|
23,791 |
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|
15,364 |
|
|
52,743 |
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|
60,434 |
|
|||
| Investing activities: | |||||||||||||||
| Property, plant and equipment expenditures |
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(1,918 |
) |
|
(1,465 |
) |
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(4,690 |
) |
|
(5,843 |
) |
|||
| Proceeds from company owned life insurance plans |
|
- |
|
|
596 |
|
|
- |
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|
596 |
|
|||
| Acquisitions, net of cash acquired |
|
- |
|
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(767 |
) |
|
- |
|
|
(45,273 |
) |
|||
| Net cash used for investing activities |
|
(1,918 |
) |
|
(1,636 |
) |
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(4,690 |
) |
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(50,520 |
) |
|||
| Financing activities: | |||||||||||||||
| Dividends paid |
|
(6,580 |
) |
|
(5,837 |
) |
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(18,292 |
) |
|
(16,318 |
) |
|||
| Proceeds from exercise of stock options |
|
61 |
|
|
1,684 |
|
|
61 |
|
|
2,037 |
|
|||
| Repurchase of treasury stock |
|
- |
|
|
- |
|
|
(427 |
) |
|
(460 |
) |
|||
| Issuance of treasury stock |
|
- |
|
|
- |
|
|
- |
|
|
72 |
|
|||
| Net cash used for financing activities |
|
(6,519 |
) |
|
(4,153 |
) |
|
(18,658 |
) |
|
(14,669 |
) |
|||
| Effect of foreign exchange rates on cash |
|
(777 |
) |
|
104 |
|
|
(1,782 |
) |
|
(480 |
) |
|||
| Increase (decrease) in cash and cash equivalents |
|
14,577 |
|
|
9,679 |
|
|
27,613 |
|
|
(5,235 |
) |
|||
| Cash and cash equivalents - beginning of period |
|
100,210 |
|
|
57,359 |
|
|
87,174 |
|
|
72,273 |
|
|||
| Cash and cash equivalents - end of period |
$ |
114,787 |
|
$ |
67,038 |
|
$ |
114,787 |
|
$ |
67,038 |
|
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Karen Bauer
(414) 371-7276
kbauer@badgermeter.com
Document and Entity Information |
Oct. 19, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Oct. 19, 2022 |
| 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 |
| 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 |
| Entity Information, Former Legal or Registered Name | Not Applicable |
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