BMI Badger Meter Inc

Badger Meter, Inc. (NYSE: BMI) today reported record results for the third quarter ended September 30, 2023.

Third Quarter 2023 Highlights

• Total sales of $186.2 million, 26% higher than the prior year’s $148.0 million.
• Operating profit increased 31% year-over-year, with operating profit margins expanding 80 basis points to 16.9% from 16.1%.
• Diluted earnings per share (EPS) increased 44% to $0.88, up from $0.61 in the comparable prior year quarter.
• Announced the 31st consecutive increase in the annual dividend rate of 20%.
• Strong cash flow with $31 million in net cash provided by operations, increasing 32% over the prior year.

“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

 

 

6,014

 

 

20,645

 

 

15,853

 

  Net earnings

$

25,969

 

$

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

 

 

76,651

 

Inventories

 

147,788

 

 

119,856

 

Other current assets

 

23,191

 

 

13,273

 

Total current assets

 

422,952

 

 

347,832

 

  Net property, plant and equipment

 

74,439

 

 

73,542

 

Intangible assets, at cost less accumulated amortization

 

54,634

 

 

53,607

 

Other long-term assets

 

25,034

 

 

26,805

 

Goodwill

 

112,698

 

 

101,261

 

Total assets

$

689,757

 

$

603,047

 

   

Liabilities and Shareholders' Equity

  Payables

$

84,997

 

$

71,440

 

Accrued compensation and employee benefits

 

25,502

 

 

20,513

 

Other current liabilities

 

18,283

 

 

18,359

 

Total current liabilities

 

128,782

 

 

110,312

 

  Deferred income taxes

 

6,441

 

 

4,648

 

Long-term employee benefits and other

 

61,828

 

 

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

 

(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

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231019353176/en/

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