Badger Meter, Inc. (NYSE: BMI) today reported results for the
second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
- Total sales of $137.8 million increased 12% over the prior
year’s $122.9 million. Excluding the unfavorable impact of the
stronger US dollar, sales increased nearly 14%
- Diluted earnings per share (EPS) increased 19% to $0.57
compared to $0.48 in the comparable prior year period
- Operating profit margins expanded 80 basis points
year-over-year
- Robust demand environment continued with strong order pace and
record backlog
- Strong cash flow with $19.7 million in net cash provided by
operations
“Record sales for the second quarter were the result of
continued strong customer demand, effective supply chain management
and continued price realization. Operating margins improved
year-over-year despite persistent cost inflation, and we continued
to experience robust orders and correspondingly, a further
expansion of our already record-high backlog,” said Kenneth C.
Bockhorst, Chairman, President and Chief Executive Officer. “I want
to thank the global Badger Meter team for their tireless commitment
to serving our customers.”
Second Quarter Operating
Results
Utility water sales increased 14% year-over-year, representing
the third consecutive quarter of mid-teens sales growth. The sales
increase in the quarter was most notable in E-Series® Ultrasonic
meters, ORION® Cellular endpoints and BEACON® SaaS revenue. Backlog
grew as continued strong order momentum more than offset the
recovering production output, as sporadic supply chain constraints
limited the conversion of utility water orders to net sales.
Sales of flow instrumentation products increased 4%
year-over-year, the result of strong order demand across most end
market applications partially offset by supply chain constraints
that impacted manufacturing output.
Operating margin was 16.0% in the second quarter of 2022, an 80
basis point improvement from the prior year’s 15.2%. Gross margin
as a percent of sales was 39.7%, an increase of 140 basis points
sequentially, as the pacing of price realization and manufacturing
output improved. Gross margin as a percent of sales declined from
the prior year’s 40.8%, as expected, as elevated material,
logistics and other costs were partially offset by higher sales
volumes and pricing gains.
Selling, engineering and administration (“SEA”) expenses in the
second quarter of 2022 were $32.7 million, or 23.7% as a percent of
sales, compared to $31.4 million, and 25.6% in the comparable prior
year quarter. The $1.3 million spending increase was due to higher
personnel and travel expenses, while the year-over-year improvement
in SEA expense leverage is the result of effective spending
controls and higher sales.
The tax rate for the second quarter of 2022 was 24.4%, modestly
lower than the prior year’s 25.0%. As a result of the above, EPS
increased 19% year-over-year, to $0.57 compared to $0.48 in the
comparable prior year period.
Outlook
Bockhorst added, “We continue to experience strong demand for
our digital water solutions coupled with modestly improving supply
chain conditions. Our supply chain execution, along with pricing
actions aligned with the value we deliver, are working to mitigate
the inflation pressures of the past year. Our demonstrated
capability to navigate external challenges and capitalize on the
robust demand environment differentiates Badger Meter.
The positive industry fundamentals driving demand, including
customer requirements to enhance operational efficiency, security
and sustainability, are resilient. Badger Meter solutions harness
the power of our smart devices, advanced ORION cellular
communication technology and BEACON software for the remote
monitoring and management of water networks to address these
customer challenges.
We continue to advance our ESG-related priorities and have
highlighted our progress in the recently published 2020-2021
Sustainability Report. We are proud to have recently been
recognized as a Manufacturing Industry Top Workplaces Award
recipient, which is especially meaningful given the employee survey
feedback that garnered the award.
Bockhorst concluded, “While we are mindful of the uncertain
macroeconomic conditions, our durable business model, increasing
digital solutions mix, proven execution and our strong balance
sheet position us well to deliver sustainable sales growth and
shareholder value while furthering 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 second quarter 2022 results today, Wednesday July 20,
2022 at 10:00 AM Central/11:00 AM Eastern time. The webcast and
related presentation can be accessed via the Investor section of
our website. Participants can also register to take part in the
call using this online registration link:
https://ige.netroadshow.com/registration/q4inc/11203/badger-meter-inc-second-quarter-2022-earnings/.
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 possible ongoing 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 June 30,
Six Months Ended June 30,
2022
2021
2022
2021
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales
$
137,833
$
122,869
$
270,235
$
240,711
Cost of sales
83,073
72,767
164,752
141,247
Gross margin
54,760
50,102
105,483
99,464
Selling, engineering and administration
32,672
31,427
64,533
63,042
Operating earnings
22,088
18,675
40,950
36,422
Interest expense, net
9
7
22
14
Other pension and postretirement costs
33
29
65
60
Earnings before income taxes
22,046
18,639
40,863
36,348
Provision for income taxes
5,382
4,667
9,839
8,595
Net earnings
$
16,664
$
13,972
$
31,024
$
27,753
Earnings per share: Basic
$
0.57
$
0.48
$
1.06
$
0.95
Diluted
$
0.57
$
0.48
$
1.06
$
0.95
Shares used in computation of earnings per share:
Basic
29,210,444
29,114,346
29,204,535
29,105,429
Diluted
29,344,351
29,312,174
29,353,708
29,313,392
BADGER METER, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in
thousands)
Assets
June 30,
December 31,
2022
2021
(Unaudited) Cash and cash equivalents
$
100,210
$
87,174
Receivables
77,247
65,866
Inventories
111,437
99,611
Other current assets
15,027
8,709
Total current assets
303,921
261,360
Net property, plant and equipment
74,040
78,050
Intangible assets, at cost less accumulated amortization
57,772
64,176
Other long-term assets
23,092
22,919
Goodwill
101,206
104,313
Total assets
$
560,031
$
530,818
Liabilities
and Shareholders' Equity
Payables
$
61,597
$
41,859
Accrued compensation and employee benefits
14,941
20,644
Other current liabilities
20,797
19,643
Total current liabilities
97,335
82,146
Deferred income taxes
4,937
5,385
Long-term employee benefits and other
41,576
40,217
Shareholders' equity
416,183
403,070
Total liabilities and shareholders' equity
$
560,031
$
530,818
BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Operating activities: Net earnings
$
16,664
$
13,972
$
31,024
$
27,753
Adjustments to reconcile net earnings to net cash provided by
operations: Depreciation
2,862
2,990
5,622
5,863
Amortization
3,817
4,022
7,833
8,088
Deferred income taxes
50
7
16
45
Noncurrent employee benefits
48
79
(64
)
160
Stock-based compensation expense
851
573
1,466
947
Changes in: Receivables
481
(2,242
)
(12,028
)
1,622
Inventories
(9,260
)
(6,096
)
(13,024
)
(4,812
)
Payables
9,379
1,075
20,128
5,366
Prepaid expenses and other current assets
(5,249
)
(831
)
(8,153
)
(1,259
)
Other current liabilities
59
964
(3,908
)
1,296
Total adjustments
3,038
541
(2,112
)
17,316
Net cash provided by operations
19,702
14,513
28,912
45,069
Investing activities: Property, plant and equipment expenditures
(1,631
)
(2,619
)
(2,773
)
(4,378
)
Acquisitions, net of cash acquired
-
55
-
(44,506
)
Net cash used for investing activities
(1,631
)
(2,564
)
(2,773
)
(48,884
)
Financing activities: Dividends paid
(5,843
)
(5,240
)
(11,712
)
(10,479
)
Proceeds from exercise of stock options
-
-
-
352
Repurchase of treasury stock
(427
)
(460
)
(427
)
(460
)
Issuance of treasury stock
-
30
-
72
Net cash used for financing activities
(6,270
)
(5,670
)
(12,139
)
(10,515
)
Effect of foreign exchange rates on cash
(810
)
(322
)
(964
)
(584
)
Increase (decrease) in cash and cash equivalents
10,991
5,957
13,036
(14,914
)
Cash and cash equivalents - beginning of period
89,219
51,402
87,174
72,273
Cash and cash equivalents - end of period
$
100,210
$
57,359
$
100,210
$
57,359
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220720005159/en/
Karen Bauer (414) 371-7276 kbauer@badgermeter.com
Badger Meter (NYSE:BMI)
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