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(Date of earliest event reported)
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(State or other
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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: October 19, 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)--October 19, 2023--Badger Meter, Inc. (NYSE: BMI) today reported record results for the third quarter ended September 30, 2023.
Third Quarter 2023 Highlights
“Our third quarter results once again demonstrated the value of our differentiated smart water solution offerings and strength of our execution, yielding 26% sales growth and record EPS in the quarter. We delivered 80 basis points of operating margin improvement as well as robust cash flow which continues to fuel our capital allocation priorities including the recent 20% annual dividend increase,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “Our ongoing success is built on our culture of continuous improvement, enabling our world-class team to execute for customers and drive outperformance for Badger Meter.”
Third Quarter Operating Results
Utility water sales increased 31% year-over-year with strong growth across the broad suite of digital smart water solutions. This includes robust adoption of cellular AMI solutions, including higher ORION® Cellular endpoint and BEACON® Software as a Service (SaaS) revenues as well as increased meter volumes, notably E-Series® Ultrasonic meters. The continued normalization of supply chain conditions and the addition of Syrinix also contributed to the year-over-year sales increase.
Sales of flow instrumentation products increased 2% year-over-year, the result of steady order demand across the water-focused end markets including wastewater and HVAC, which more than offset anticipated modest sales declines in the de-emphasized general industrial markets.
Operating earnings increased 31% year-over-year, with operating profit margins expanding 80 basis points to 16.9% in the third quarter of 2023, up from the prior year’s 16.1%. Gross margin dollars increased $15.2 million year-over-year, and gross margin as a percent of sales was 39.1%, an increase of 20 basis points over the comparable prior year quarter. Gross margins continue to benefit from higher volumes and structural positive sales mix trends.
Selling, engineering and administrative (SEA) expenses in the third quarter of 2023 were $41.3 million, with SEA as a percent of sales improving 50 basis points to 22.2% versus 22.7% in the comparable prior year quarter. The $7.6 million year-over-year increase in SEA spend included higher personnel-related costs such as headcount, salaries, sales and management incentives and R&D expenses as well as the addition of Syrinix, including the associated intangible asset amortization.
The tax rate for the third quarter of 2023 was 20.3% inclusive of a discrete favorable income tax benefit related to equity compensation transactions, compared to 25.1% in the prior year quarter. As such, EPS was a record $0.88, up 44% compared to $0.61 in the comparable prior year period.
Outlook
Bockhorst continued, “With healthy market conditions and another quarter of business momentum, we continue to strengthen our foundation for sustainable, profitable, long-term growth. The resilient order pace and robust bid funnel are reflective of strong customer support for our differentiated portfolio of digital smart water solutions. These comprehensive yet flexible hardware-enabled software offerings deliver efficiency, resiliency, and sustainability for customers to address the variety of challenges facing the water industry.
As we prepare to close out the year, we remain focused on execution and capitalizing on the strength of our end markets with anticipated strong sales and operating performance, yet with sequentially fewer total operating days as a result of holidays in the fourth quarter.
Robust cash flow and ample cash and credit availability provide us with the financial flexibility to execute our capital allocation priorities and continued investments in growth.”
Bockhorst concluded, “We believe we are well positioned, given our order momentum, elevated backlog, leading technologies, execution track record, positive market dynamics and the strength of our people. I remain excited about the tremendous value creation opportunities ahead of us as we further 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 third quarter 2023 results today, Thursday October 19, 2023 at 10:00 AM Central/11:00 AM Eastern time. The webcast and related presentation can be accessed via the Investor section of the Company’s website. Individuals wishing to participate in the call should use this online registration link: https://www.netroadshow.com/events/login?show=6a889942&confId=56083
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 September 30, |
|
Nine Months Ended September 30, |
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net sales |
$ |
186,193 |
|
$ |
148,009 |
|
$ |
521,152 |
|
$ |
418,244 |
|
||||
| Cost of sales |
|
113,470 |
|
|
90,487 |
|
|
316,179 |
|
|
255,239 |
|
||||
| Gross margin |
|
72,723 |
|
|
57,522 |
|
|
204,973 |
|
|
163,005 |
|
||||
| Selling, engineering and administration |
|
41,301 |
|
|
33,651 |
|
|
119,003 |
|
|
98,184 |
|
||||
| Operating earnings |
|
31,422 |
|
|
23,871 |
|
|
85,970 |
|
|
64,821 |
|
||||
| Interest income, net |
|
(1,200 |
) |
|
(108 |
) |
|
(2,649 |
) |
|
(86 |
) |
||||
| Other pension and postretirement costs |
|
32 |
|
|
32 |
|
|
97 |
|
|
97 |
|
||||
| Earnings before income taxes |
|
32,590 |
|
|
23,947 |
|
|
88,522 |
|
|
64,810 |
|
||||
| Provision for income taxes |
|
6,621 |
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|
6,014 |
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|
20,645 |
|
|
15,853 |
|
||||
| Net earnings |
$ |
25,969 |
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$ |
17,933 |
|
$ |
67,877 |
|
$ |
48,957 |
|
||||
| Earnings per share: | ||||||||||||||||
| Basic |
$ |
0.89 |
|
$ |
0.61 |
|
$ |
2.32 |
|
$ |
1.68 |
|
||||
| Diluted |
$ |
0.88 |
|
$ |
0.61 |
|
$ |
2.30 |
|
$ |
1.67 |
|
||||
| Shares used in computation of earnings per share: | ||||||||||||||||
| Basic |
|
29,294,886 |
|
|
29,215,982 |
|
|
29,275,445 |
|
|
29,211,488 |
|
||||
| Diluted |
|
29,473,374 |
|
|
29,372,464 |
|
|
29,448,475 |
|
|
29,363,097 |
|
||||
| BADGER METER, INC. | ||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
|
Assets |
September 30, |
|
December 31, |
|||||
|
2023 |
|
2022 |
||||||
| (Unaudited) | ||||||||
| Cash and cash equivalents |
$ |
162,910 |
$ |
138,052 |
||||
| Receivables |
|
89,063 |
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|
76,651 |
|
||
| Inventories |
|
147,788 |
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|
119,856 |
|
||
| Other current assets |
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23,191 |
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|
13,273 |
|
||
| Total current assets |
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422,952 |
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|
347,832 |
|
||
| Net property, plant and equipment |
|
74,439 |
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|
73,542 |
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||
| Intangible assets, at cost less accumulated amortization |
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54,634 |
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|
53,607 |
|
||
| Other long-term assets |
|
25,034 |
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26,805 |
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||
| Goodwill |
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112,698 |
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|
101,261 |
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| Total assets |
$ |
689,757 |
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$ |
603,047 |
|
||
|
Liabilities and Shareholders' Equity |
||||||||
| Payables |
$ |
84,997 |
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$ |
71,440 |
|
||
| Accrued compensation and employee benefits |
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25,502 |
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|
20,513 |
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||
| Other current liabilities |
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18,283 |
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|
18,359 |
|
||
| Total current liabilities |
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128,782 |
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|
110,312 |
|
||
| Deferred income taxes |
|
6,441 |
|
|
4,648 |
|
||
| Long-term employee benefits and other |
|
61,828 |
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|
45,665 |
|
||
| Shareholders' equity |
|
492,706 |
|
|
442,422 |
|
||
| Total liabilities and shareholders' equity |
$ |
689,757 |
|
$ |
603,047 |
|
||
| BADGER METER, INC. | ||||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| (in thousands) | ||||||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Operating activities: | ||||||||||||||||
| Net earnings |
$ |
25,969 |
|
$ |
17,933 |
|
$ |
67,877 |
|
$ |
48,957 |
|
||||
| Adjustments to reconcile net earnings to net cash provided by operations: | ||||||||||||||||
| Depreciation |
|
2,662 |
|
|
2,791 |
|
|
8,100 |
|
|
8,413 |
|
||||
| Amortization |
|
4,404 |
|
|
3,915 |
|
|
12,820 |
|
|
11,748 |
|
||||
| Deferred income taxes |
|
(25 |
) |
|
8 |
|
|
(401 |
) |
|
24 |
|
||||
| Noncurrent employee benefits |
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(52 |
) |
|
(74 |
) |
|
(274 |
) |
|
(138 |
) |
||||
| Stock-based compensation expense |
|
1,356 |
|
|
704 |
|
|
3,963 |
|
|
2,170 |
|
||||
| Changes in: | ||||||||||||||||
| Receivables |
|
(5,352 |
) |
|
(6,832 |
) |
|
(11,855 |
) |
|
(18,860 |
) |
||||
| Inventories |
|
(3,875 |
) |
|
(3,184 |
) |
|
(27,628 |
) |
|
(16,207 |
) |
||||
| Payables |
|
4,178 |
|
|
3,742 |
|
|
12,282 |
|
|
23,870 |
|
||||
| Prepaid expenses and other assets |
|
(2,299 |
) |
|
(1,252 |
) |
|
(7,279 |
) |
|
(9,405 |
) |
||||
| Other liabilities |
|
4,467 |
|
|
6,040 |
|
|
14,567 |
|
|
2,171 |
|
||||
| Total adjustments |
|
5,464 |
|
|
5,858 |
|
|
4,295 |
|
|
3,786 |
|
||||
| Net cash provided by operations |
|
31,433 |
|
|
23,791 |
|
|
72,172 |
|
|
52,743 |
|
||||
| Investing activities: | ||||||||||||||||
| Property, plant and equipment expenditures |
|
(3,014 |
) |
|
(1,918 |
) |
|
(9,949 |
) |
|
(4,690 |
) |
||||
| Acquisitions, net of cash acquired |
|
- |
|
|
- |
|
|
(17,127 |
) |
|
- |
|
||||
| Net cash used for investing activities |
|
(3,014 |
) |
|
(1,918 |
) |
|
(27,076 |
) |
|
(4,690 |
) |
||||
| Financing activities: | ||||||||||||||||
| Dividends paid |
|
(7,917 |
) |
|
(6,580 |
) |
|
(21,134 |
) |
|
(18,292 |
) |
||||
| Proceeds from exercise of stock options |
|
909 |
|
|
61 |
|
|
967 |
|
|
61 |
|
||||
| Repurchase of treasury stock |
|
- |
|
|
- |
|
|
- |
|
|
(427 |
) |
||||
| Net cash used for financing activities |
|
(7,008 |
) |
|
(6,519 |
) |
|
(20,167 |
) |
|
(18,658 |
) |
||||
| Effect of foreign exchange rates on cash |
|
(306 |
) |
|
(777 |
) |
|
(71 |
) |
|
(1,782 |
) |
||||
| Increase in cash and cash equivalents |
|
21,105 |
|
|
14,577 |
|
|
24,858 |
|
|
27,613 |
|
||||
| Cash and cash equivalents - beginning of period |
|
141,805 |
|
|
100,210 |
|
|
138,052 |
|
|
87,174 |
|
||||
| Cash and cash equivalents - end of period |
$ |
162,910 |
|
$ |
114,787 |
|
$ |
162,910 |
|
$ |
114,787 |
|
||||
Karen Bauer
(414) 371-7276
kbauer@badgermeter.com
Document and Entity Information |
Oct. 19, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Oct. 19, 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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