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Date of Report
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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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(a)
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Not applicable. |
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(b)
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Not applicable. |
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(c)
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Not applicable. |
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(d)
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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: January 27, 2023
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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)--January 27, 2023--Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter and full year ended December 31, 2022.
Fourth Quarter 2022 Highlights
Full Year 2022 Highlights
“Badger Meter finished the year with strong financial results which reflect the differentiated execution and customer focus our team exhibited throughout fiscal 2022. Sales for the quarter increased 8.5% reflecting positive industry fundamentals and the competitive advantages of our smart water solutions, which continued to fuel sales and order momentum. We continued to actively manage inflation and supply chain dynamics, as well as working capital which led to robust cash flow generation in the quarter. Shortly after year-end, we deployed approximately $18 million to acquire Syrinix, Ltd., a provider of pressure monitoring solutions, demonstrating our ongoing strategic growth focus on enhancing our smart water offerings,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “I am extremely proud of our team’s accomplishments in 2022 and remain excited about the opportunities ahead.”
Fourth Quarter Operating Results
Utility water sales increased 9% year-over-year, which was notable given the more difficult year-over-year comparison after double digit sales growth in the preceding four quarters. Sales growth was again broad-based, reflecting the growing adoption of our cellular AMI solution, with higher ORION® Cellular endpoint and BEACON® SaaS revenues coupled with increased meter volumes including E-Series® Ultrasonic meters. Backlog expanded further as record order rates in the quarter exceeded sales.
Sales of flow instrumentation products increased 8% year-over-year, with solid order demand across the water-focused end markets and modestly improving supply chain dynamics which aided manufacturing output. Excluding the unfavorable impact of the strong US dollar, flow instrumentation sales increased 10% year-over-year.
Gross margin as a percent of sales was 38.7%, consistent with the prior quarter and in the middle of the Company’s normalized range as the benefit of strong orders, sales mix and pricing pull-through continued to offset persistent inflationary pressures and intermittent supply chain disruptions.
Selling, engineering and administration (SEA) expenses in the fourth quarter of 2022 were $34.5 million, or 23.4% as a percent of sales, compared to $32.0 million, and 23.6% in the comparable prior year quarter. The $2.5 million increase in SEA expenses year-over-year was due to higher personnel and incentive compensation costs, R&D investments and travel.
The tax rate for the fourth quarter of 2022 was 23.4%, modestly lower than the prior year’s 24.5%. As a result of the above, EPS was $0.60 compared to $0.59 in the comparable prior year period.
Full Year Recap and Outlook
Bockhorst continued, “Badger Meter’s 2022 results provide a clear demonstration of how our ongoing strategic actions position the company to perform well throughout economic cycles, generating superior value for shareholders. Amid persistent volatility in the operating environment, Badger Meter delivered double digit revenue growth, SEA operating leverage, EPS expansion, robust working capital management and strong cash flow. This in turn enabled the strategic execution of our capital allocation priorities including a dividend increase and the recently announced acquisition of Syrinix, Ltd. These accomplishments are a testament to the resiliency of our business model and world-class Badger Meter team.”
“As we enter 2023, the demand environment remains robust, aided by favorable secular growth trends for digital smart water solutions delivering efficiency, resiliency and sustainability. Our value proposition has supported our ability to drive price realization, which will provide continuing benefits to our results. While macro challenges have not dissipated, we do expect pockets of inflationary leveling along with continual supply chain improvements as the year progresses. In summary, we believe we are well positioned regardless of the macro environment, as our comprehensive offerings, exceptional execution and the strength of our balance sheet remain competitive advantages.”
Bockhorst concluded, “Badger Meter has an unwavering focus on innovation, serving customers and operational execution. Our exceptional team and durable business model uniquely position us to deliver shareholder value while furthering our vision to preserve and protect the world’s most precious resource.”
Conference Call and Webcast Information
Badger Meter management will hold a conference call to discuss the Company’s fourth quarter and full year 2022 results today, Friday January 27, 2023 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=fb45eb35&confId=45700
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. 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 Annual Report on 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 December 31, | Twelve Months Ended December 31, | |||||||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
| Net sales |
$ |
147,324 |
|
$ |
135,748 |
|
$ |
565,568 |
|
$ |
505,198 |
|
||||||
| Cost of sales |
|
90,359 |
|
|
80,913 |
|
|
345,598 |
|
|
299,714 |
|
||||||
| Gross margin |
|
56,965 |
|
|
54,835 |
|
|
219,970 |
|
|
205,484 |
|
||||||
| Selling, engineering and administration |
|
34,491 |
|
|
31,975 |
|
|
132,675 |
|
|
126,761 |
|
||||||
| Operating earnings |
|
22,474 |
|
|
22,860 |
|
|
87,295 |
|
|
78,723 |
|
||||||
| Interest income, net |
|
(465 |
) |
|
(49 |
) |
|
(552 |
) |
|
(20 |
) |
||||||
| Other pension and postretirement costs |
|
33 |
|
|
30 |
|
|
130 |
|
|
120 |
|
||||||
| Earnings before income taxes |
|
22,906 |
|
|
22,879 |
|
|
87,717 |
|
|
78,623 |
|
||||||
| Provision for income taxes |
|
5,367 |
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|
5,603 |
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|
21,221 |
|
|
17,739 |
|
||||||
| Net earnings |
$ |
17,539 |
|
$ |
17,276 |
|
$ |
66,496 |
|
$ |
60,884 |
|
||||||
| Earnings per share: | ||||||||||||||||||
| Basic |
$ |
0.60 |
|
$ |
0.59 |
|
$ |
2.28 |
|
$ |
2.09 |
|
||||||
| Diluted |
$ |
0.60 |
|
$ |
0.59 |
|
$ |
2.26 |
|
$ |
2.08 |
|
||||||
| Shares used in computation of earnings per share: | ||||||||||||||||||
| Basic |
|
29,230,963 |
|
|
29,194,121 |
|
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29,218,486 |
|
|
29,144,160 |
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||||||
| Diluted |
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29,406,499 |
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29,367,693 |
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29,376,077 |
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29,337,586 |
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||||||
|
BADGER METER, INC. |
||||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||||
| (in thousands) | ||||||||||
|
Assets |
December 31, |
|
December 31, |
|||||||
|
2022 |
|
2021 |
||||||||
| (Unaudited) | ||||||||||
| Cash and cash equivalents |
$ |
138,052 |
$ |
87,174 |
||||||
| Receivables |
|
76,651 |
|
65,866 |
||||||
| Inventories |
|
119,856 |
|
99,611 |
||||||
| Other current assets |
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13,273 |
|
8,709 |
||||||
| Total current assets |
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347,832 |
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261,360 |
||||||
| Net property, plant and equipment |
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73,542 |
|
78,050 |
||||||
| Intangible assets, at cost less accumulated amortization |
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53,607 |
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64,176 |
||||||
| Other long-term assets |
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26,805 |
|
22,919 |
||||||
| Goodwill |
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101,261 |
|
104,313 |
||||||
| Total assets |
$ |
603,047 |
$ |
530,818 |
||||||
|
Liabilities and Shareholders' Equity |
||||||||||
| Payables |
$ |
71,440 |
$ |
41,859 |
||||||
| Accrued compensation and employee benefits |
|
20,513 |
|
20,644 |
||||||
| Other current liabilities |
|
18,359 |
|
19,643 |
||||||
| Total current liabilities |
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110,312 |
|
82,146 |
||||||
| Deferred income taxes |
|
4,648 |
|
5,385 |
||||||
| Long-term employee benefits and other |
|
45,665 |
|
40,217 |
||||||
| Shareholders' equity |
|
442,422 |
|
403,070 |
||||||
| Total liabilities and shareholders' equity |
$ |
603,047 |
$ |
530,818 |
||||||
| BADGER METER, INC. | |||||||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
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|
2022 |
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|
2021 |
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|
2022 |
|
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|
2021 |
|
|||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||
| Operating activities: | |||||||||||||||||||
| Net earnings |
$ |
17,539 |
|
$ |
17,276 |
|
$ |
66,496 |
|
$ |
60,884 |
|
|||||||
| Adjustments to reconcile net earnings to net cash provided by operations: | |||||||||||||||||||
| Depreciation |
|
2,677 |
|
|
2,672 |
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|
11,090 |
|
|
11,291 |
|
|||||||
| Amortization |
|
3,403 |
|
|
4,213 |
|
|
15,151 |
|
|
16,571 |
|
|||||||
| Deferred income taxes |
|
(5,643 |
) |
|
(3,066 |
) |
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(5,619 |
) |
|
(3,055 |
) |
|||||||
| Noncurrent employee benefits |
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(510 |
) |
|
(466 |
) |
|
(648 |
) |
|
(234 |
) |
|||||||
| Stock-based compensation expense |
|
978 |
|
|
793 |
|
|
3,148 |
|
|
2,330 |
|
|||||||
| Changes in: | |||||||||||||||||||
| Receivables |
|
7,532 |
|
|
7,745 |
|
|
(11,328 |
) |
|
(1,240 |
) |
|||||||
| Inventories |
|
(4,814 |
) |
|
(7,948 |
) |
|
(21,021 |
) |
|
(13,633 |
) |
|||||||
| Payables |
|
4,137 |
|
|
(415 |
) |
|
28,007 |
|
|
7,005 |
|
|||||||
| Prepaid expenses and other assets |
|
(1,152 |
) |
|
3,367 |
|
|
(10,557 |
) |
|
(8,281 |
) |
|||||||
| Other liabilities |
|
5,561 |
|
|
2,906 |
|
|
7,732 |
|
|
15,872 |
|
|||||||
| Total adjustments |
|
12,169 |
|
|
9,801 |
|
|
15,955 |
|
|
26,626 |
|
|||||||
| Net cash provided by operations |
|
29,708 |
|
|
27,077 |
|
|
82,451 |
|
|
87,510 |
|
|||||||
| Investing activities: | |||||||||||||||||||
| Property, plant and equipment expenditures |
|
(1,201 |
) |
|
(903 |
) |
|
(5,891 |
) |
|
(6,746 |
) |
|||||||
| Proceeds from company owned life insurance plans |
|
- |
|
|
- |
|
|
- |
|
|
596 |
|
|||||||
| Acquisitions, net of cash acquired |
|
- |
|
|
- |
|
|
- |
|
|
(45,273 |
) |
|||||||
| Net cash used for investing activities |
|
(1,201 |
) |
|
(903 |
) |
|
(5,891 |
) |
|
(51,423 |
) |
|||||||
| Financing activities: | |||||||||||||||||||
| Dividends paid |
|
(6,589 |
) |
|
(5,839 |
) |
|
(24,881 |
) |
|
(22,155 |
) |
|||||||
| Proceeds from exercise of stock options |
|
642 |
|
|
- |
|
|
703 |
|
|
2,036 |
|
|||||||
| Repurchase of treasury stock |
|
- |
|
|
- |
|
|
(427 |
) |
|
(460 |
) |
|||||||
| Issuance of treasury stock |
|
- |
|
|
- |
|
|
- |
|
|
72 |
|
|||||||
| Net cash used for financing activities |
|
(5,947 |
) |
|
(5,839 |
) |
|
(24,605 |
) |
|
(20,507 |
) |
|||||||
| Effect of foreign exchange rates on cash |
|
705 |
|
|
(199 |
) |
|
(1,077 |
) |
|
(679 |
) |
|||||||
| Increase in cash and cash equivalents |
|
23,265 |
|
|
20,136 |
|
|
50,878 |
|
|
14,901 |
|
|||||||
| Cash and cash equivalents - beginning of period |
|
114,787 |
|
|
67,038 |
|
|
87,174 |
|
|
72,273 |
|
|||||||
| Cash and cash equivalents - end of period |
$ |
138,052 |
|
$ |
87,174 |
|
$ |
138,052 |
|
$ |
87,174 |
|
|||||||
Karen Bauer
(414) 371-7276
kbauer@badgermeter.com
Document and Entity Information |
Jan. 27, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Jan. 27, 2023 |
| 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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