Badger Meter, Inc. (NYSE: BMI) today reported results for the
fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights
- Total sales of $112.3 million, an increase of 4% compared to
$107.6 million in the comparable prior year quarter.
- Net earnings and diluted earnings per share (EPS) were $13.1
million and $0.45, respectively, compared to $12.3 million and
$0.42 in the comparable prior year period.
- Deployed $29.1 million, net of cash acquired, for s::can GmbH
(“s::can”) effective November 1, 2020, adding online water quality
monitoring to existing trusted Badger Meter solutions.
Full Year 2020 Highlights
- Full year 2020 sales of $425.5 million, a slight increase
compared to $424.6 million in 2019 reflecting the resiliency of the
utility water industry.
- Strong incremental profitability with a 70 basis point increase
in operating profit margins.
- Net earnings and diluted earnings per share (EPS) were $49.3
million and $1.69, respectively, compared to $47.2 million and
$1.61 in the comparable prior year period.
- Generated $89.6 million of cash provided by operations, an 11%
increase year-over-year.
“Badger Meter delivered another quarter of strong performance
and an outstanding year in light of the many and varied challenges
associated with managing through the pandemic,” said Kenneth C.
Bockhorst, Chairman, President and Chief Executive Officer. “Our
performance is the direct result of the durability of our business
model and the efforts of our employees across the globe who have
helped us safely maintain our operations and serve customers.”
Fourth Quarter Operating Results
Utility water sales increased 8% from the strong comparable prior
year quarter, with the acquisition of s::can contributing
approximately 3% of the sales increase. Existing AMI (advanced
metering infrastructure) project installation schedules progressed
and we experienced growth in sales of ultrasonic meters and ORION®
Cellular radios with related BEACON® Software as a Service (SaaS).
Sales of flow instrumentation products were 10% lower
year-over-year, sequentially improved from the third quarter, yet
continuing to reflect the sluggish activity across most of the
varied industrial end markets served.
Operating margins of 15.1% were 10 basis points lower than the
prior year’s 15.2%. Gross margin increased $2.9 million
year-over-year, and gross margin percent increased 100 basis points
to 39.2% from the prior year’s 38.2%. The quarter benefitted from
favorable sales mix with higher SaaS, cellular radio and ultrasonic
meter sales and favorable facility utilization. Margins were also
supported by positive price/cost dynamics, the result of strategic
pricing initiatives in advance of rising brass input costs. These
benefits were partially offset by a discrete network sunset
provision associated with future equipment upgrades for early-stage
Code Division Multiple Access (“CDMA”) radio endpoints for a
limited number of North American customers, along with the
acquisition-related fair value step-up of acquired s::can
inventory.
Selling, engineering and administration (“SEA”) expenses in the
fourth quarter of 2020 of $27.1 million increased $2.3 million from
the prior year’s $24.8 million with the inclusion of s::can and
resulting acquisition-related intangible amortization along with
higher personnel costs, partially offset by lower travel and other
pandemic-impacted expenses. SEA leverage was 24.1% up from 23.0% in
the comparable prior year quarter. The tax rate of 22.6% was
modestly lower than the prior year’s 24.3%.
Full Year Recap and Outlook
Bockhorst continued, “Recapping 2020, our team successfully
supported customers while managing through the unprecedented health
and economic crisis. With the backdrop of countless changes to how
we all do business, Badger Meter delivered utility water revenue
growth, EBITDA margin and EPS expansion, robust working capital
management and free cash flow, and strategic execution of our
capital allocation priorities with accretive acquisitions and
dividend growth. We are excited about the acquisition of s::can
completed in the quarter and the recently announced acquisition of
Analytical Technology, Inc. (“ATi) effective January 1, 2021. These
accomplishments are a testament to the criticality of the water
industry and the exceptional Badger Meter team.”
“While we anticipate the overall economic environment will
remain uncertain, we are confident in our strategic growth plans
and the fundamental long-term drivers of our offerings. Leveraging
our industry-leading ORION® Cellular endpoints, along with current
and future communication and software technologies, we are creating
robust digital solutions to operationalize real-time data into
actionable insights that drive better results and optimize
operations. The inclusion of the recently acquired s::can and ATi
portfolio of comprehensive and scalable water quality monitoring
solutions will now allow us to deliver real-time water quality data
to our customers. Access to real-time, on demand water quality
parameters will enable water utilities to improve operational
security, awareness and efficiency, while our industrial customers
will benefit from process and discharge water quality
monitoring.”
“Our order backlog, sales momentum, and encouraging pipeline of
potential business gives us confidence as we start the new year.
Our teams continue to focus on what we can control as we serve our
customers and maintain safe operating environments. While strategic
pricing initiatives have and continue to be implemented, the recent
rapid and significant escalation in brass costs may be an
impediment to near-term margin expansion opportunities.”
Bockhorst concluded, "Badger Meter is a company that has
successfully managed through challenges over its 115-year history,
and this pandemic is no exception. We are fortunate to navigate
through this environment from a position of strength. We believe
that the combination of our talented team, resilient portfolio of
solutions and strong balance sheet uniquely position Badger Meter
for success in 2021 and beyond as we work to protect the world’s
most precious resource.”
Conference Call and Webcast
Information Badger Meter management will hold a conference
call to discuss 2020 results today, January 29, 2021 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.
Participants can register to take part in the call using this
online registration link:
http://www.directeventreg.com/registration/event/6277158. After
registering, instructions will be shared on how to join the call.
If online registration is unavailable, registration can also be
accomplished by calling 888-869-1189 or 706-643-5902 and providing
the conference ID number: 6277158. 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 duration, severity and geographic spread of the COVID-19
pandemic, government actions to address or mitigate the impact of
the COVID-19 pandemic, and the potential 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
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2020
2019
2020
2019
(Unaudited) (Unaudited) Net sales
$
112,329
$
107,556
$
425,544
$
424,625
Cost of sales
68,274
66,431
257,295
261,097
Gross margin
44,055
41,125
168,249
163,528
Selling, engineering and administration
27,093
24,782
103,093
101,380
Operating earnings
16,962
16,343
65,156
62,148
Interest expense (income), net
12
(27
)
30
253
Other pension and postretirement costs
36
165
145
288
Earnings before income taxes
16,914
16,205
64,981
61,607
Provision for income taxes
3,820
3,931
15,638
14,430
Net earnings
$
13,094
$
12,274
$
49,343
$
47,177
Earnings per share: Basic
$
0.45
$
0.42
$
1.70
$
1.63
Diluted
$
0.45
$
0.42
$
1.69
$
1.61
Shares used in computation of earnings per share:
Basic
29,057,249
29,039,296
29,052,301
29,028,204
Diluted
29,257,929
29,227,804
29,229,868
29,220,165
BADGER METER, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in
thousands)
Assets
December 31,
December 31,
2020
2019
(Unaudited) Cash and cash equivalents
$
72,273
$
48,871
Receivables
61,689
61,365
Inventories
81,586
81,948
Other current assets
5,303
7,910
Total current assets
220,851
200,094
Net property, plant and equipment
82,705
85,761
Intangible assets, at cost less accumulated amortization
53,598
48,163
Other long-term assets
22,518
16,617
Goodwill
88,708
71,258
Total assets
$
468,380
$
421,893
Liabilities
and Shareholders' Equity
Short-term debt
$
-
$
4,480
Payables
34,923
31,523
Accrued compensation and employee benefits
14,617
12,754
Other current liabilities
15,659
8,490
Total current liabilities
65,199
57,247
Deferred income taxes
5,696
876
Long-term employee benefits and other
36,226
32,702
Shareholders' equity
361,259
331,068
Total liabilities and shareholders' equity
$
468,380
$
421,893
BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS (in thousands) Three Months Ended Twelve Months
Ended December 31, December 31, December 31, December 31,
2020
2019
2020
2019
(Unaudited) (Unaudited) Operating activities: Net earnings
$
13,094
$
12,274
$
49,343
$
47,177
Adjustments to reconcile net earnings to net cash provided
by operations: Depreciation
3,121
2,881
12,253
11,569
Amortization
3,160
3,254
12,963
12,577
Deferred income taxes
(3,483
)
(1,542
)
(3,082
)
(1,524
)
Noncurrent employee benefits
(365
)
110
206
(40
)
Stock-based compensation expense
374
332
1,415
1,214
Changes in: Receivables
(148
)
896
3,036
5,451
Inventories
(59
)
3,039
5,129
(1,220
)
Payables
(6,876
)
757
(391
)
11,642
Prepaid expenses and other current assets
(1,347
)
(1,926
)
(3,522
)
(7,732
)
Other current liabilities
8,429
(500
)
12,228
1,600
Total adjustments
2,806
7,301
40,235
33,537
Net cash provided by operations
15,900
19,575
89,578
80,714
Investing activities: Property, plant and equipment
expenditures
(3,204
)
(1,907
)
(9,059
)
(7,496
)
Acquisitions, net of cash acquired
(29,134
)
-
(29,134
)
-
Net cash used for investing activities
(32,338
)
(1,907
)
(38,193
)
(7,496
)
Financing activities: Net decrease short-term debt
-
-
(4,600
)
(13,500
)
Payment of contingent acquisition consideration
(1,001
)
(905
)
(1,001
)
(2,555
)
Dividends paid
(5,232
)
(4,943
)
(20,340
)
(18,595
)
Proceeds from exercise of stock options
553
998
1,058
1,961
Repurchase of treasury stock
(182
)
(1,848
)
(3,116
)
(5,207
)
Issuance of treasury stock
54
44
180
187
Net cash used for financing activities
(5,808
)
(6,654
)
(27,819
)
(37,709
)
Effect of foreign exchange rates on cash
618
129
(164
)
276
(Decrease) Increase in cash and cash equivalents
(21,628
)
11,143
23,402
35,785
Cash and cash equivalents - beginning of period
93,901
37,728
48,871
13,086
Cash and cash equivalents - end of period
$
72,273
$
48,871
$
72,273
$
48,871
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210129005028/en/
Karen Bauer at (414) 371-7276 kbauer@badgermeter.com
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