Badger Meter, Inc. (NYSE: BMI) today reported results for the
third quarter ended September 30, 2022.
Third Quarter 2022 Highlights
- Record total sales of $148.0 million, 15% higher than the prior
year’s $128.7 million. Excluding the unfavorable impact of the
stronger US dollar, sales increased nearly 17%
- Operating profit increased 23% with operating profit margins
expanding 100 basis points year-over-year
- Diluted earnings per share (EPS) increased 13% to $0.61, up
from $0.54 in the comparable prior year period
- Strong cash flow with $23.8 million in net cash provided by
operations
- Announced the 30th consecutive increase in the annual dividend
rate
“Badger Meter delivered another quarter of strong financial
results reflecting our innovative product and software offerings,
differentiated execution and durable underlying demand for smart
water solutions in our served markets. In the third quarter, we
achieved 15% sales growth, extending our track record to four
consecutive quarters of double-digit organic revenue performance.
We also delivered record EPS of $0.61, an increase of 13%
year-over-year. Operating margin performance remains solid despite
ongoing supply chain and inflation challenges. The resilient order
pace and bid funnel bodes well for continued sales and earnings
performance,” said Kenneth C. Bockhorst, Chairman, President and
Chief Executive Officer. “I want to thank the global Badger Meter
team for continuing to adeptly navigate the dynamic environment in
support of our customers.”
Third Quarter Operating Results
Utility water sales growth was outstanding, increasing 17%
year-over-year and the fourth consecutive quarter of mid-teens
sales growth. Consistent with past quarters, the sales increase was
broad-based and most notable in E-Series® Ultrasonic meters, ORION®
Cellular endpoints and BEACON® SaaS revenue. Backlog expanded
further as market demand remained strong and more than offset
operational productivity that yielded higher production output.
Sales of flow instrumentation products increased 5%
year-over-year, the result of solid order demand across the
water-focused end market applications, partially offset by
component constraints that limited manufacturing output.
Operating earnings increased 23% year-over-year, with operating
profit margins expanding 100 basis points to 16.1% in the third
quarter of 2022 up from the prior year’s 15.1%. Gross margin as a
percent of sales was 38.9%, in the middle of the Company’s
normalized range, yet as anticipated, below the prior year’s 39.8%.
The cumulative impact of input cost inflation across various
electronic and other components, logistics and other categories
were partially offset by higher sales volumes and ongoing pricing
gains.
Selling, engineering and administration (SEA) expenses in the
third quarter of 2022 were $33.7 million, or 22.7% as a percent of
sales, compared to $31.7 million, and 24.7% in the comparable prior
year quarter. The approximately $2.0 million increase in SEA
expenses was due to higher personnel costs, R&D investments and
travel, 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 third quarter of 2022 was 25.1%, higher
than the prior year’s 18.3% which included a discrete favorable
income tax benefit related to equity compensation transactions. As
a result of the above, EPS increased 13% year-over-year, to $0.61
compared to $0.54 in the comparable prior year period.
Outlook
Bockhorst added, “The demand environment remains robust as
customers continue to adopt our digital smart water solutions that
deliver efficiency, resiliency, and sustainability to address the
variety of underlying secular challenges the water industry faces.
Our success in selling our broad ‘choice-matters’ water quality and
quantity offerings continue to illustrate the benefits of our
differentiated, flexible and comprehensive smart water AMI
solutions.
“This commercial excellence, combined with nimble execution have
demonstrated our ability to navigate persistent macro challenges
and drive outperformance. Our strong order pace and bid funnel,
combined with the value-based pricing actions we have taken
throughout this unprecedented inflationary environment, are
supportive of revenue growth and margin expansion throughout
economic cycles.
“Robust cash flow and ample credit availability provide us with
the financial flexibility to execute our capital allocation
priorities, including the recent increase in the annual dividend,
and continued investments in growth.”
Bockhorst concluded, “Badger Meter is well-positioned to
continue its track record of profitable growth enhanced by our
innovative offerings, end market resiliency and differentiated
execution. We believe this combination, along with our durable
business model aligned with our vision to preserve and protect the
world’s most precious resource, will generate positive shareholder
value over the long term.”
Conference Call and Webcast
Information
Badger Meter management will hold a conference call to discuss
the Company’s third quarter 2022 results today, Wednesday October
19, 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://www.netroadshow.com/events/login?show=ad683104&confId=42665.
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 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 September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Net sales
$
148,009
$
128,738
$
418,244
$
369,449
Cost of sales
90,487
77,554
255,239
218,801
Gross margin
57,522
51,184
163,005
150,648
Selling, engineering and administration
33,651
31,744
98,184
94,786
Operating earnings
23,871
19,440
64,821
55,862
Interest (income) expense, net
(108
)
14
(86
)
28
Other pension and postretirement costs
32
30
97
90
Earnings before income taxes
23,947
19,396
64,810
55,744
Provision for income taxes
6,014
3,541
15,853
12,136
Net earnings
$
17,933
$
15,855
$
48,957
$
43,608
Earnings per share:
Basic
$
0.61
$
0.54
$
1.68
$
1.50
Diluted
$
0.61
$
0.54
$
1.67
$
1.49
Shares used in computation of earnings
per share: Basic
29,215,982
29,157,628
29,211,488
29,124,491
Diluted
29,372,464
29,341,832
29,363,097
29,324,534
BADGER METER, INC. CONSOLIDATED CONDENSED BALANCE
SHEETS (in thousands)
Assets
September 30,
December 31,
2022
2021
(Unaudited) Cash and cash equivalents
$
114,787
$
87,174
Receivables
83,491
65,866
Inventories
113,608
99,611
Other current assets
13,742
8,709
Total current assets
325,628
261,360
Net property, plant and equipment
72,369
78,050
Intangible assets, at cost less accumulated amortization
54,314
64,176
Other long-term assets
22,962
22,919
Goodwill
99,100
104,313
Total assets
$
574,373
$
530,818
Liabilities
and Shareholders' Equity
Payables
$
65,462
$
41,859
Accrued compensation and employee benefits
17,734
20,644
Other current liabilities
18,589
19,643
Total current liabilities
101,785
82,146
Deferred income taxes
4,575
5,385
Long-term employee benefits and other
45,154
40,217
Shareholders' equity
422,859
403,070
Total liabilities and shareholders' equity
$
574,373
$
530,818
BADGER METER, INC. CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS (in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Operating activities: Net earnings
$
17,933
$
15,855
$
48,957
$
43,608
Adjustments to reconcile net earnings to net
cash provided by operations:
Depreciation
2,791
2,756
8,413
8,619
Amortization
3,915
4,270
11,748
12,358
Deferred income taxes
8
(34
)
24
11
Noncurrent employee benefits
(74
)
72
(138
)
232
Stock-based compensation expense
704
590
2,170
1,537
Changes in: Receivables
(6,832
)
(10,607
)
(18,860
)
(8,985
)
Inventories
(3,184
)
(873
)
(16,207
)
(5,685
)
Payables
3,742
2,054
23,870
7,420
Prepaid expenses and other current assets
(1,252
)
(10,389
)
(9,405
)
(11,648
)
Other liabilities
6,040
11,670
2,171
12,967
Total adjustments
5,858
(491
)
3,786
16,826
Net cash provided by operations
23,791
15,364
52,743
60,434
Investing activities:
Property, plant and equipment expenditures
(1,918
)
(1,465
)
(4,690
)
(5,843
)
Proceeds from company owned life insurance plans
-
596
-
596
Acquisitions, net of cash acquired
-
(767
)
-
(45,273
)
Net cash used for investing activities
(1,918
)
(1,636
)
(4,690
)
(50,520
)
Financing activities:
Dividends paid
(6,580
)
(5,837
)
(18,292
)
(16,318
)
Proceeds from exercise of stock options
61
1,684
61
2,037
Repurchase of treasury stock
-
-
(427
)
(460
)
Issuance of treasury stock
-
-
-
72
Net cash used for financing activities
(6,519
)
(4,153
)
(18,658
)
(14,669
)
Effect of foreign exchange rates on cash
(777
)
104
(1,782
)
(480
)
Increase (decrease) in cash and cash
equivalents
14,577
9,679
27,613
(5,235
)
Cash and cash equivalents - beginning of period
100,210
57,359
87,174
72,273
Cash and cash equivalents - end of period
$
114,787
$
67,038
$
114,787
$
67,038
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221019005142/en/
Karen Bauer (414) 371-7276 kbauer@badgermeter.com
Badger Meter (NYSE:BMI)
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