Badger Meter, Inc. (NYSE: BMI) today reported results for the
first quarter ended March 31, 2020.
First Quarter 2020 Highlights
- Delivered strong operational performance while rapidly
implementing health, safety and business continuity plans to
deliver critical products and services deemed essential for
customers during the COVID-19 pandemic.
- Net sales for the first quarter of 2020 were $108.5 million, an
increase of 3% compared to $104.9 million in the comparable prior
year quarter; municipal water sales increased 6%
year-over-year.
- Net earnings and diluted earnings per share (EPS) were $11.9
million and $0.41, respectively, compared to $10.8 million and
$0.37 in the comparable prior year period, an 11% year-over-year
EPS increase.
- $30.5 million of cash provided by operations representing
strong earnings conversion.
Overview
"In this unprecedented time, our focus is on the health, safety
and well-being of our employees, customers, suppliers and
communities,” said Kenneth C. Bockhorst, Chairman, President and
CEO of Badger Meter. “Around the world, Badger Meter is following
all government requirements as they are issued and at this point,
our facilities are operational and continuing to serve customers.
We have implemented certain contingency planning steps to reduce
expenses, manage our operating efficiency and closely monitor
working capital. Badger Meter is in a strong financial position,
and we are well positioned to navigate the uncertainty of the
current environment.”
First Quarter Operating Results
Municipal water sales increased 6% over the prior year with the
quarter’s demand and shipment levels largely intact, reflecting the
critical and essential nature of water utility operations. Existing
project installation schedules remained on track, and demand for
ultrasonic meter technology and cellular LTE-M radios continued to
gain traction. Sales of flow instrumentation products were 4% lower
year-over-year, with generally sluggish demand across the array of
end markets served.
Operating margins improved 110 basis points year-over-year to
14.8% in the first quarter of 2020 from 13.7% in the comparable
prior year quarter. Gross profit margins were strong at 39.9%, a
130 basis point increase over the prior year’s 38.6% due primarily
to positive sales mix and price/cost dynamics.
Selling, engineering and administration (“SEA”) expenses in the
first quarter of 2020 of $27.3 million were slightly higher than
the prior year’s $26.1 million, due to increased personnel and new
product development costs. This represented a modest 30 basis point
increase in SEA as a percent of sales compared to the prior year.
The tax rate of 25.6% was slightly higher than the prior year’s
23.5%.
“In summary, I am pleased with the quarter’s performance in
light of the evolving crisis,” stated Bockhorst. “Our teams did a
tremendous job implementing enhanced safety and cleaning protocols
at our sites, providing our customers with exceptional service and
adjusting to remote work. I want to thank the entire Badger Meter
team for their commitment, resiliency and dedication.”
Outlook
The extent of the impact of COVID-19 on the global economy and
the company’s financial results is uncertain and continues to
rapidly evolve. Like many other industries, overall activity in the
end markets served is beginning to slow, with customers now
starting to signal potential project delays, deferral of orders and
channel inventory de-stocking. In addition, modest supply
disruption, cargo capacity constraints and related shortages of
components may impact operations over the next several months. As a
result, the company implemented temporary cost containment actions,
including reductions in discretionary spending, a hiring freeze,
reduced work hour furloughs and executive salary reductions.
Bockhorst continued, “We remain committed to effectively
managing working capital and cash costs in order to preserve
liquidity. We have approximately $70 million in cash on the balance
sheet, and $125 million of revolving credit availability that we
believe provides us sufficient capacity to fund foreseeable needs,
including the quarterly dividend.
“A crisis such as this truly reinforces the criticality of the
water industry. Despite the current situation, we remain focused on
innovation and continue on track to launch new products in 2020. As
we actively manage the short term, we are also contemplating the
potential longer-term implications of this crisis on our business
with two particular trends emerging. First, the benefit of
automated meter reading adoption, whether AMR or AMI, to remotely
assess meter functionality, early leak detection and usage reads.
Second, remote actuation of flow restriction technology, to either
limit, or in the case of this pandemic, immediately return to
service full water availability to end consumers. We expect both of
these trends to provide long-term opportunities for Badger
Meter.”
Bockhorst concluded, “While we cannot currently forecast the
length or severity of the varied economic repercussions of the
pandemic, we expect that based on the necessity of our solutions,
our sound balance sheet and committed workforce that we can nimbly
navigate the challenges ahead and continue to 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 first quarter 2020 results today, Thursday April 16,
2020 at 10:00 AM Central/11:00 AM Eastern time. 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 (International) and entering the passcode
8468386. 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
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
www.badgermeter.com.
BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS (in thousands, except share and earnings per share data)
Three Months Ended
March 31,
March 31,
2020
2019
(Unaudited)
(Unaudited)
Net sales
$
108,508
$
104,881
Cost of sales
65,186
64,424
Gross margin
43,322
40,457
Selling, engineering and administration
27,307
26,130
Operating earnings
16,015
14,327
Interest expense, net
31
129
Other pension and postretirement costs
44
47
Earnings before income taxes
15,940
14,151
Provision for income taxes
4,086
3,327
Net earnings
$
11,854
$
10,824
Earnings per share: Basic
$
0.41
$
0.37
Diluted
$
0.41
$
0.37
Shares used in computation of earnings per share:
Basic
29,042,158
29,028,964
Diluted
29,223,915
29,238,624
BADGER METER, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in
thousands)
Assets
March 31,
December 31,
2020
2019
(Unaudited)
Cash and cash equivalents
$
70,376
$
48,871
Receivables
59,164
61,365
Inventories
74,430
81,948
Other current assets
7,459
7,910
Total current assets
211,429
200,094
Net property, plant and equipment
84,570
85,761
Intangible assets, at cost less accumulated amortization
46,396
48,163
Other long-term assets
17,303
16,617
Goodwill
71,258
71,258
Total assets
$
430,956
$
421,893
Liabilities
and Shareholders' Equity
Short-term debt
4,400
4,480
Payables
35,915
31,523
Accrued compensation and employee benefits
9,181
12,754
Other current liabilities
10,960
8,490
Total current liabilities
60,456
57,247
Deferred income taxes
2,428
876
Long-term employee benefits and other
32,351
32,702
Shareholders' equity
335,721
331,068
Total liabilities and shareholders' equity
$
430,956
$
421,893
BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS (in thousands)
Three Months Ended
March 31,
March 31,
2020
2019
(Unaudited)
(Unaudited)
Operating activities: Net earnings
$
11,854
$
10,824
Adjustments to reconcile net earnings to net cash provided
by operations: Depreciation
2,975
2,978
Amortization
3,256
3,264
Deferred income taxes
392
(1
)
Noncurrent employee benefits
88
117
Stock-based compensation expense
307
265
Changes in: Receivables
1,385
(1,943
)
Inventories
7,437
166
Payables
4,517
4,540
Prepaid expenses and other current assets
(609
)
(2,101
)
Other current liabilities
(1,064
)
(294
)
Total adjustments
18,684
6,991
Net cash provided by operations
30,538
17,815
Investing activities: Property, plant and equipment
expenditures
(1,942
)
(2,160
)
Net cash used for investing activities
(1,942
)
(2,160
)
Financing activities: Net decrease short-term debt
-
(7,000
)
Payment of contingent acquisition consideration
-
(1,000
)
Dividends paid
(4,938
)
(4,357
)
Proceeds from exercise of stock options
478
471
Repurchase of treasury stock
(2,467
)
(1,873
)
Issuance of treasury stock
55
52
Net cash used for financing activities
(6,872
)
(13,707
)
Effect of foreign exchange rates on cash
(219
)
(1
)
Increase in cash and cash equivalents
21,505
1,947
Cash and cash equivalents - beginning of period
48,871
13,086
Cash and cash equivalents - end of period
$
70,376
$
15,033
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200416005063/en/
Karen Bauer at (414) 371-7276 kbauer@badgermeter.com
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