Badger Meter Reports First Quarter 2019 Results

MILWAUKEE–(BUSINESS WIRE)–Badger
Meter, Inc.
(NYSE: BMI) today reported results for the first quarter
ended March 31, 2019.

First Quarter 2019 Highlights

  • Net sales for the first quarter of 2019 were $104.9 million, level
    with the prior year’s sales of $105.0 million in the first quarter of
    2018.
  • Net earnings and diluted earnings per share (EPS) were $10.8 million
    and $0.37, respectively, compared to $7.5 million and $0.26 in the
    comparable prior year period, a 42% year-over-year EPS increase.
  • $17.8 million of cash provided by operations representing strong
    earnings conversion.
  • Announced meaningful technology wins with Columbia, SC and Aurora, CO
    which demonstrate the increasing market acceptance for cellular as the
    standard Advanced Metering Infrastructure (AMI) solution of choice for
    water utilities.

First Quarter Operating Results

“While we experienced outstanding improvement in profitability
year-over-year, our first quarter sales were modestly impacted by
inclement weather and deferred orders by customers awaiting our next
generation large static meters and LTE-M radio products. This typical
uneven demand pattern does not deter our view on the overall market
environment which remains solid, as evidenced by the two sizable smart
water contract awards we recently announced with Columbia, SC and
Aurora, CO,” said Kenneth C. Bockhorst, President and Chief Executive
Officer of Badger Meter.

Municipal water sales increased 1% over the prior year. Extreme weather
during the early part of the quarter, coupled with customers’ deliberate
deferral of orders to obtain the latest version of advanced technology
products including the commercial E-Series® Ultrasonic water
meters and ORION® Cellular endpoints impacted the timing of
orders and shipments. Sales of flow instrumentation products were 3%
lower year-over-year, with unfavorable foreign currency rate changes
negatively impacting the comparison, while further channel penetration
in key target markets were offset by lower sales in certain
de-emphasized end markets.

Operating margins improved 420 basis points year-over-year to 13.7% in
the first quarter of 2019 from 9.5% in the comparable prior year
quarter. Gross profit margins were strong at 38.6%, a 360 basis point
increase over the prior year’s 35.0% despite the flat sales volume.
Gross profit benefitted from both positive sales mix and price/cost
dynamics. In addition, the prior year included facility shutdown costs
which did not reoccur.

Selling, engineering and administration (“SEA”) expenses in the first
quarter of 2019 of $26.1 million were slightly lower than the prior
year’s $26.8 million, and as a percent of sales, SEA leverage improved
60 basis points. The tax rate of 23.5% was slightly higher than the
prior year’s 22.2%.

Bockhorst continued, “Overall, I am pleased with the market recognition
and adoption of our leading technologies, our profit expansion and the
ongoing focus on continuous improvement. I want to thank the entire
Badger Meter team for their efforts and dedication to serving customers
and enhancing profitability.”

Outlook

“Our backlog and order rates remain solid, underscored by a high level
of interest in our proven, innovative smart water solutions, including
our newly launched larger size E-Series Ultrasonic meters and ORION
Cellular LTE-M radios. We continue to leverage our expanded technology
offerings across our extensive installed base, delivering significant
value to our customers.” Bockhorst concluded, “We have a healthy balance
sheet for potential tuck-in acquisitions aligned with our key growth
initiatives, and we are well-positioned to deliver improving sales and
earnings growth while helping to 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 first quarter 2019 results today, Wednesday April 17, 2019 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 7373619. 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 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 Securities and Exchange Commission 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 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,
2019 2018
(Unaudited) (Unaudited)
 
Net sales $ 104,881 $ 105,041
 
Cost of sales   64,424   68,293  
 
Gross margin 40,457 36,748
 
Selling, engineering and administration   26,130   26,774  
 
Operating earnings 14,327 9,974
 
Interest expense, net 129 290
Other pension and postretirement costs (benefits)   47   (19 )
 
Earnings before income taxes 14,151 9,703
 
Provision for income taxes   3,327   2,157  
 
Net earnings $ 10,824 $ 7,546  
 
Earnings per share:
 
Basic $ 0.37 $ 0.26
 
Diluted $ 0.37 $ 0.26
 
Shares used in computation of earnings per share:
 
Basic 29,028,964 28,932,787
 
Diluted 29,238,624 29,150,046
 
 
BADGER METER, INC.
 
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
 
 

Assets

March 31, December 31,
2019 2018
(Unaudited)
 
Cash $ 15,033 $ 13,086
Receivables 68,095 66,300
Inventories 80,554 80,804
Other current assets   7,541   4,469
Total current assets 171,223 164,659
 
Net property, plant and equipment 89,282 90,321
Intangible assets, at cost less accumulated amortization 53,534 55,418
Other long-term assets 17,952 11,035
Goodwill   71,258   71,258
Total assets $ 403,249 $ 392,691
 
 

Liabilities and Shareholders’ Equity

 
Short-term debt $ 10,980 $ 18,060
Payables 25,983 22,469
Accrued compensation and employee benefits 9,583 13,768
Other current liabilities   11,378   5,718
Total current liabilities 57,924 60,015
 
Deferred income taxes 3,217 3,332
Long-term employee benefits and other 33,495 25,841
Shareholders’ equity   308,613   303,503
Total liabilities and shareholders’ equity $ 403,249 $ 392,691
 
       
BADGER METER, INC.
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
Three Months Ended
March 31, March 31,
2019 2018
(Unaudited) (Unaudited)
Operating activities:
Net earnings $ 10,824 $ 7,546
 
Adjustments to reconcile net earnings to net cash provided by
operations:
Depreciation 2,978 3,175
Amortization 3,264 3,537
Deferred income taxes (1 ) 1
Noncurrent employee benefits 117 94
Stock-based compensation expense 265 471
Changes in:
Receivables (1,943 ) (4,919 )
Inventories 166 265
Payables 4,540 (4,479 )
Prepaid expenses and other assets (2,101 ) (1,586 )
Other liabilities   (294 )   2,670  
Total adjustments   6,991     (771 )
Net cash provided by operations   17,815     6,775  
 
Investing activities:
Property, plant and equipment expenditures   (2,160 )   (3,043 )
Net cash used for investing activities   (2,160 )   (3,043 )
 
Financing activities:
Net (decrease) increase short-term debt (7,000 ) 3,500
Payment of contingent acquisition consideration (1,000 )
Dividends paid (4,357 ) (3,770 )
Proceeds from exercise of stock options 471 231
Repurchase of treasury stock (1,873 ) (1,619 )
Issuance of treasury stock   52     65  
Net cash used for financing activities   (13,707 )   (1,593 )
Effect of foreign exchange rates on cash   (1 )   229  
 
Increase in cash 1,947 2,368
Cash – beginning of period 13,086 11,164
   
Cash – end of period $ 15,033   $ 13,532  

Contacts

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