BMI Badger Meter Inc

Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter ended December 31, 2019.

Fourth Quarter 2019 Highlights

• Net sales for the fourth quarter of 2019 were $107.6 million, an increase of 3% compared to $104.4 million in the comparable prior year quarter; municipal water sales increased 8% year-over-year.
• GAAP net earnings and diluted earnings per share (EPS) were $12.3 million and $0.42, respectively, compared to $11.2 million and $0.39 in the comparable prior year period.
• Excluding the impact of executive retirement charges in 2018, EPS of $0.42 in the fourth quarter of 2019 increased 5% from adjusted EPS of $0.40 in the fourth quarter of 2018. (See 2018 adjusted results in the attached GAAP to Non-GAAP reconciliation).

Full Year 2019 Highlights

• Net sales in 2019 totaled $424.6 million compared to $433.7 million in the comparable prior year. Domestic municipal water sales increased 1% on a full year basis.
• Gross profit margin for the year of 38.5%, an increase of 110 basis points year-over-year.
• GAAP net earnings and EPS were $47.2 million and $1.61, respectively, compared to $27.8 million and $0.95 in the comparable prior year period.
• Excluding the impact of pension termination settlement and executive retirement charges in the prior year, EPS of $1.61 increased 5% from the prior year’s adjusted EPS of $1.54. (See 2018 adjusted results in the attached GAAP to Non-GAAP reconciliation).
• Record cash provided by operations of $80.7 million.

Fourth Quarter Operating Results

“We are very pleased with the strong growth in our domestic municipal water revenue and continued interest in our newer technology products. Flow instrumentation demand was tepid, as global industrial activity was soft in the quarter. Our operating margins improved year-over-year and cash flow remains strong. Overall, it was a solid finish to the year and I want to express my appreciation to all of our Badger Meter colleagues across the globe for the progress made this year,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer of Badger Meter.

Municipal water sales increased 8% year-over-year with robust demand for the new three and four-inch ultrasonic meters incorporating our D-Flow technology, as well as ORION® Cellular LTE-M radio installations including those at key customer projects announced earlier in the year. Customer feedback on implementation has been very positive. Sales of flow instrumentation products declined 11% year-over-year across the array of industrial end markets served globally due to sluggish market demand.

Operating margins were 15.2% in the fourth quarter of 2019 compared to an adjusted 14.6% in the comparable prior year period. Gross profit margins were strong at 38.2%, reflective of positive product sales mix, most notably commercial ultrasonic meters and cellular radio solutions.

Selling, engineering and administration (“SEA”) expenses in the fourth quarter of 2019 totaled $24.8 million compared to an adjusted $24.9 million in the prior year. Adjusted SEA leverage improved 80 basis points to 23.0% from 23.8% in the prior year comparable quarter. The income tax rate of 24.3% was modestly higher than the prior year’s adjusted 23.0%.

Full Year Recap and Outlook

Bockhorst continued, “As I reflect on our 2019 results and look ahead to 2020, a number of accomplishments stand out. We launched multiple, successful new products in 2019. Despite the innovation pause that it created mid-year, we grew domestic municipal sales for the full year and exited the year with momentum. We made significant progress improving gross margins, consistently delivering in the upper half of our normalized range. Our SEA was well managed, and we launched a number of processes to strengthen our working capital management, leading to outstanding cash flow and earnings conversion for the year.”

“As we move into 2020, municipal water spending remains healthy and we continue to experience favorable feedback from installation and pilot testing of our leading technologies. We have several new products that will be launching, including the next generation of our residential ultrasonic meters and our flow restriction meter. While we expect a modest potential headwind from higher brass costs, our profit margins should continue to benefit from positive product and software sales mix and continuous improvement activities across all aspects of our operations. We have extensive available capital to deploy on internal research and development and disciplined, strategic acquisitions with an active funnel of opportunities.” Bockhorst concluded, “As we embark on our 115th year in business, we believe that our comprehensive portfolio of smart water solutions and commitment to innovation will continue to solve customer challenges and preserve 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 2019 results today, Wednesday, February 5, 2020 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 or by dialing 1-877-823-9761 (US) or 1-647-689-5327 (Intl) and entering the passcode 4995411. 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 (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 also 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 SEC for further information regarding risk factors. 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

Badger Meter is an innovator in flow measurement, control and communications solutions, serving water utilities, municipalities, and commercial and industrial customers worldwide. The company’s products measure water, oil, chemicals, and other fluids, and are known for accuracy, long-lasting durability and for providing valuable and timely measurement data. For more information, visit 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,

 

2019

 

 

 

2018

 

 

2019

 

 

2018

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

  Net sales

$

107,556

 

$

104,413

$

424,625

$

433,732

  Cost of sales

 

66,431

 

 

64,262

 

261,097

 

271,383

  Gross margin

 

41,125

 

 

40,151

 

163,528

 

162,349

  Selling, engineering and administration

 

24,782

 

 

25,341

 

101,380

 

105,480

  Operating earnings

 

16,343

 

 

14,810

 

62,148

 

56,869

  Interest (income) expense, net

 

(27

)

 

163

 

253

 

1,157

Other pension and postretirement costs

 

165

 

 

61

 

288

 

19,860

  Earnings before income taxes

 

16,205

 

 

14,586

 

61,607

 

35,852

  Provision for income taxes

 

3,931

 

 

3,347

 

14,430

 

8,062

  Net earnings

$

12,274

 

$

11,239

$

47,177

$

27,790

  Earnings per share:   Basic

$

0.42

 

$

0.39

$

1.63

$

0.96

  Diluted

$

0.42

 

$

0.39

$

1.61

$

0.95

  Shares used in computation of earnings per share:   Basic

 

29,039,296

 

 

28,989,523

 

29,028,204

 

28,993,074

  Diluted

 

29,227,804

 

 

29,178,969

 

29,220,165

 

29,189,257

  BADGER METER, INC.   RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES TO GAAP PERFORMANCE MEASURES (in thousands, except share and earnings per share data)    

Three Months Ended

Twelve Months Ended

December 31,

December 31,

December 31,

December 31,

2019

 

2018

 

2019

 

2018

(Unaudited) (Unaudited) (Unaudited)   Selling, engineering and administration (GAAP measure)

$

24,782

$

25,341

$

101,380

$

105,480

  Executive retirement charges

 

-

 

477

 

-

 

2,575

  Adjusted selling, engineering and administration

$

24,782

$

24,864

$

101,380

$

102,905

    Operating earnings (GAAP measure)

$

16,343

$

14,810

$

62,148

$

56,869

  Executive retirement charges

 

-

 

477

 

-

 

2,575

  Adjusted operating earnings

$

16,343

$

15,287

$

62,148

$

59,444

    Net earnings (GAAP measure)

$

12,274

$

11,239

$

47,177

$

27,790

  Executive retirement charges, net of tax

 

-

 

359

 

-

 

2,357

  Pension termination settlement charge, net of tax

 

-

 

-

 

-

 

14,786

  Adjusted net earnings

$

12,274

$

11,598

$

47,177

$

44,933

    Diluted earnings per share (GAAP measure)

$

0.42

$

0.39

$

1.61

$

0.95

  Executive retirement charges, net of tax

 

-

 

0.01

 

-

 

0.09

  Pension termination settlement charge, net of tax

 

-

 

-

 

-

 

0.50

  Adjusted diluted earnings per share

$

0.42

$

0.40

$

1.61

$

1.54

  BADGER METER, INC.   CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)    

Assets

December 31,

December 31,

2019

2018

(Unaudited)

  Cash

$

48,871

$

13,086

Receivables

 

61,365

 

66,300

Inventories

 

81,948

 

80,804

Other current assets

 

7,910

 

4,469

Total current assets

 

200,094

 

164,659

  Net property, plant and equipment

 

85,761

 

90,321

Intangible assets, at cost less accumulated amortization

 

48,163

 

55,418

Other long-term assets

 

16,617

 

11,035

Goodwill

 

71,258

 

71,258

Total assets

$

421,893

$

392,691

   

Liabilities and Shareholders' Equity

  Short-term debt

$

4,480

$

18,060

Payables

 

31,523

 

22,469

Accrued compensation and employee benefits

 

12,754

 

13,768

Other current liabilities

 

8,490

 

5,718

Total current liabilities

 

57,247

 

60,015

  Deferred income taxes

 

876

 

3,332

Long-term employee benefits and other

 

32,702

 

25,841

Shareholders' equity

 

331,068

 

303,503

Total liabilities and shareholders' equity

$

421,893

$

392,691

  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,

2019

 

2018

 

2019

 

2018

(Unaudited) (Unaudited) (Unaudited) Operating activities: Net earnings

$

12,274

 

$

11,239

 

$

47,177

 

$

27,790

 

  Adjustments to reconcile net earnings to net cash provided by operations:   Depreciation

 

2,881

 

 

2,558

 

 

11,569

 

 

11,354

 

Amortization

 

3,254

 

 

3,286

 

 

12,577

 

 

12,961

 

Deferred income taxes

 

(1,542

)

 

(5,401

)

 

(1,524

)

 

(5,269

)

Noncurrent employee benefits

 

110

 

 

203

 

 

(40

)

 

464

 

Pension termination settlement charges

 

-

 

 

-

 

 

-

 

 

19,900

 

Contribution to pension plan

 

-

 

 

-

 

 

-

 

 

(2,860

)

Stock-based compensation expense

 

332

 

 

800

 

 

1,214

 

 

4,174

 

Changes in: Receivables

 

896

 

 

3,463

 

 

5,451

 

 

(7,999

)

Inventories

 

3,039

 

 

3,450

 

 

(1,220

)

 

4,859

 

Payables

 

757

 

 

(7,400

)

 

11,642

 

 

(9,868

)

Prepaid expenses and other current assets

 

(1,926

)

 

511

 

 

(7,732

)

 

(5,062

)

Other current liabilities

 

(500

)

 

7,710

 

 

1,600

 

 

9,906

 

Total adjustments

 

7,301

 

 

9,180

 

 

33,537

 

 

32,560

 

Net cash provided by operations

 

19,575

 

 

20,419

 

 

80,714

 

 

60,350

 

  Investing activities: Property, plant and equipment expenditures

 

(1,907

)

 

(1,424

)

 

(7,496

)

 

(8,643

)

Acquisitions, net of cash acquired and future payments

 

-

 

 

-

 

 

-

 

 

(8,048

)

Net cash used for investing activities

 

(1,907

)

 

(1,424

)

 

(7,496

)

 

(16,691

)

  Financing activities: Net decrease short-term debt

 

-

 

 

(12,579

)

 

(13,500

)

 

(21,012

)

Payment of contingent acquisition consideration

 

(905

)

 

-

 

 

(2,555

)

 

(2,034

)

Dividends paid

 

(4,943

)

 

(4,370

)

 

(18,595

)

 

(16,265

)

Proceeds from exercise of stock options

 

998

 

 

510

 

 

1,961

 

 

1,443

 

Repurchase of treasury stock

 

(1,848

)

 

(344

)

 

(5,207

)

 

(4,795

)

Issuance of treasury stock

 

44

 

 

42

 

 

187

 

 

523

 

Net cash used for financing activities

 

(6,654

)

 

(16,741

)

 

(37,709

)

 

(42,140

)

Effect of foreign exchange rates on cash

 

129

 

 

203

 

 

276

 

 

403

 

  Increase in cash

 

11,143

 

 

2,457

 

 

35,785

 

 

1,922

 

Cash - beginning of period

 

37,728

 

 

10,629

 

 

13,086

 

 

11,164

 

  Cash - end of period

$

48,871

 

$

13,086

 

$

48,871

 

$

13,086

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200205005064/en/

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