BMI

Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Highlights

• Total sales of $147.3 million, 8.5% higher than the prior year’s $135.7 million. Excluding the unfavorable impact of the stronger US dollar, sales increased approximately 10%.
• Delivered diluted earnings per share (EPS) of $0.60, an increase from $0.59 last year despite difficult prior year comparisons.
• Strong cash flow with $29.7 million in net cash provided by operations.

Full Year 2022 Highlights

• Record total sales of $565.6 million, 11.9% higher than the prior year’s $505.2 million. Excluding the unfavorable impact of the strong US dollar, sales increased approximately 13%.
• Software sales reached a record $33.8 million, representing 6% of consolidated revenues.
• Operating profit increased 11% over the prior year.
• EPS increased 9% to $2.26, up from $2.08 in the prior year.
• Strong cash flow with $82.5 million in net cash provided by operations.

“Badger Meter finished the year with strong financial results which reflect the differentiated execution and customer focus our team exhibited throughout fiscal 2022. Sales for the quarter increased 8.5% reflecting positive industry fundamentals and the competitive advantages of our smart water solutions, which continued to fuel sales and order momentum. We continued to actively manage inflation and supply chain dynamics, as well as working capital which led to robust cash flow generation in the quarter. Shortly after year-end, we deployed approximately $18 million to acquire Syrinix, Ltd., a provider of pressure monitoring solutions, demonstrating our ongoing strategic growth focus on enhancing our smart water offerings,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “I am extremely proud of our team’s accomplishments in 2022 and remain excited about the opportunities ahead.”

Fourth Quarter Operating Results

Utility water sales increased 9% year-over-year, which was notable given the more difficult year-over-year comparison after double digit sales growth in the preceding four quarters. Sales growth was again broad-based, reflecting the growing adoption of our cellular AMI solution, with higher ORION® Cellular endpoint and BEACON® SaaS revenues coupled with increased meter volumes including E-Series® Ultrasonic meters. Backlog expanded further as record order rates in the quarter exceeded sales.

Sales of flow instrumentation products increased 8% year-over-year, with solid order demand across the water-focused end markets and modestly improving supply chain dynamics which aided manufacturing output. Excluding the unfavorable impact of the strong US dollar, flow instrumentation sales increased 10% year-over-year.

Gross margin as a percent of sales was 38.7%, consistent with the prior quarter and in the middle of the Company’s normalized range as the benefit of strong orders, sales mix and pricing pull-through continued to offset persistent inflationary pressures and intermittent supply chain disruptions.

Selling, engineering and administration (SEA) expenses in the fourth quarter of 2022 were $34.5 million, or 23.4% as a percent of sales, compared to $32.0 million, and 23.6% in the comparable prior year quarter. The $2.5 million increase in SEA expenses year-over-year was due to higher personnel and incentive compensation costs, R&D investments and travel.

The tax rate for the fourth quarter of 2022 was 23.4%, modestly lower than the prior year’s 24.5%. As a result of the above, EPS was $0.60 compared to $0.59 in the comparable prior year period.

Full Year Recap and Outlook

Bockhorst continued, “Badger Meter’s 2022 results provide a clear demonstration of how our ongoing strategic actions position the company to perform well throughout economic cycles, generating superior value for shareholders. Amid persistent volatility in the operating environment, Badger Meter delivered double digit revenue growth, SEA operating leverage, EPS expansion, robust working capital management and strong cash flow. This in turn enabled the strategic execution of our capital allocation priorities including a dividend increase and the recently announced acquisition of Syrinix, Ltd. These accomplishments are a testament to the resiliency of our business model and world-class Badger Meter team.”

“As we enter 2023, the demand environment remains robust, aided by favorable secular growth trends for digital smart water solutions delivering efficiency, resiliency and sustainability. Our value proposition has supported our ability to drive price realization, which will provide continuing benefits to our results. While macro challenges have not dissipated, we do expect pockets of inflationary leveling along with continual supply chain improvements as the year progresses. In summary, we believe we are well positioned regardless of the macro environment, as our comprehensive offerings, exceptional execution and the strength of our balance sheet remain competitive advantages.”

Bockhorst concluded, “Badger Meter has an unwavering focus on innovation, serving customers and operational execution. Our exceptional team and durable business model uniquely position us to deliver 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 fourth quarter and full year 2022 results today, Friday January 27, 2023 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=fb45eb35&confId=45700

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. 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 Annual Report on 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 December 31, Twelve Months Ended December 31,

2022

 

2021

 

2022

 

2021

(Unaudited) (Unaudited)   Net sales

$

147,324

 

$

135,748

 

$

565,568

 

$

505,198

 

  Cost of sales

 

90,359

 

 

80,913

 

 

345,598

 

 

299,714

 

  Gross margin

 

56,965

 

 

54,835

 

 

219,970

 

 

205,484

 

  Selling, engineering and administration

 

34,491

 

 

31,975

 

 

132,675

 

 

126,761

 

  Operating earnings

 

22,474

 

 

22,860

 

 

87,295

 

 

78,723

 

  Interest income, net

 

(465

)

 

(49

)

 

(552

)

 

(20

)

Other pension and postretirement costs

 

33

 

 

30

 

 

130

 

 

120

 

  Earnings before income taxes

 

22,906

 

 

22,879

 

 

87,717

 

 

78,623

 

  Provision for income taxes

 

5,367

 

 

5,603

 

 

21,221

 

 

17,739

 

  Net earnings

$

17,539

 

$

17,276

 

$

66,496

 

$

60,884

 

  Earnings per share:   Basic

$

0.60

 

$

0.59

 

$

2.28

 

$

2.09

 

  Diluted

$

0.60

 

$

0.59

 

$

2.26

 

$

2.08

 

  Shares used in computation of earnings per share:   Basic

 

29,230,963

 

 

29,194,121

 

 

29,218,486

 

 

29,144,160

 

  Diluted

 

29,406,499

 

 

29,367,693

 

 

29,376,077

 

 

29,337,586

 

 

BADGER METER, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)  

Assets

December 31,

 

December 31,

2022

 

2021

(Unaudited)   Cash and cash equivalents

$

138,052

$

87,174

Receivables

 

76,651

 

65,866

Inventories

 

119,856

 

99,611

Other current assets

 

13,273

 

8,709

Total current assets

 

347,832

 

261,360

  Net property, plant and equipment

 

73,542

 

78,050

Intangible assets, at cost less accumulated amortization

 

53,607

 

64,176

Other long-term assets

 

26,805

 

22,919

Goodwill

 

101,261

 

104,313

Total assets

$

603,047

$

530,818

   

Liabilities and Shareholders' Equity

  Payables

$

71,440

$

41,859

Accrued compensation and employee benefits

 

20,513

 

20,644

Other current liabilities

 

18,359

 

19,643

Total current liabilities

 

110,312

 

82,146

  Deferred income taxes

 

4,648

 

5,385

Long-term employee benefits and other

 

45,665

 

40,217

Shareholders' equity

 

442,422

 

403,070

Total liabilities and shareholders' equity

$

603,047

$

530,818

BADGER METER, INC.   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands)     Three Months Ended December 31, Twelve Months Ended December 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

(Unaudited) (Unaudited) Operating activities: Net earnings

$

17,539

 

$

17,276

 

$

66,496

 

$

60,884

 

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

 

2,677

 

 

2,672

 

 

11,090

 

 

11,291

 

Amortization

 

3,403

 

 

4,213

 

 

15,151

 

 

16,571

 

Deferred income taxes

 

(5,643

)

 

(3,066

)

 

(5,619

)

 

(3,055

)

Noncurrent employee benefits

 

(510

)

 

(466

)

 

(648

)

 

(234

)

Stock-based compensation expense

 

978

 

 

793

 

 

3,148

 

 

2,330

 

Changes in: Receivables

 

7,532

 

 

7,745

 

 

(11,328

)

 

(1,240

)

Inventories

 

(4,814

)

 

(7,948

)

 

(21,021

)

 

(13,633

)

Payables

 

4,137

 

 

(415

)

 

28,007

 

 

7,005

 

Prepaid expenses and other assets

 

(1,152

)

 

3,367

 

 

(10,557

)

 

(8,281

)

Other liabilities

 

5,561

 

 

2,906

 

 

7,732

 

 

15,872

 

Total adjustments

 

12,169

 

 

9,801

 

 

15,955

 

 

26,626

 

Net cash provided by operations

 

29,708

 

 

27,077

 

 

82,451

 

 

87,510

 

  Investing activities: Property, plant and equipment expenditures

 

(1,201

)

 

(903

)

 

(5,891

)

 

(6,746

)

Proceeds from company owned life insurance plans

 

-

 

 

-

 

 

-

 

 

596

 

Acquisitions, net of cash acquired

 

-

 

 

-

 

 

-

 

 

(45,273

)

Net cash used for investing activities

 

(1,201

)

 

(903

)

 

(5,891

)

 

(51,423

)

  Financing activities: Dividends paid

 

(6,589

)

 

(5,839

)

 

(24,881

)

 

(22,155

)

Proceeds from exercise of stock options

 

642

 

 

-

 

 

703

 

 

2,036

 

Repurchase of treasury stock

 

-

 

 

-

 

 

(427

)

 

(460

)

Issuance of treasury stock

 

-

 

 

-

 

 

-

 

 

72

 

Net cash used for financing activities

 

(5,947

)

 

(5,839

)

 

(24,605

)

 

(20,507

)

Effect of foreign exchange rates on cash

 

705

 

 

(199

)

 

(1,077

)

 

(679

)

  Increase in cash and cash equivalents

 

23,265

 

 

20,136

 

 

50,878

 

 

14,901

 

Cash and cash equivalents - beginning of period

 

114,787

 

 

67,038

 

 

87,174

 

 

72,273

 

  Cash and cash equivalents - end of period

$

138,052

 

$

87,174

 

$

138,052

 

$

87,174

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230127005019/en/

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