Badger Meter, Inc. (NYSE: BMI) today reported record results for
the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights
- Total sales of $175.9 million, 28% higher than the prior year’s
$137.8 million.
- Operating profit increased 34% year-over-year, with operating
profit margins expanding 80 basis points to 16.8% from 16.0%.
- Diluted earnings per share (EPS) increased 33% to $0.76, up
from $0.57 in the comparable prior year quarter.
- Robust demand environment continued with book to bill ratio
greater than one.
- Released 2022 Sustainability Report illustrating powerful
combination of strong ESG and financial performance.
“As our record second quarter results demonstrate, Badger Meter
continues to benefit from the adoption of our differentiated smart
water solutions, favorable market conditions and sound execution.
In addition to our record sales performance, we delivered strong
operating profit margin expansion, record EPS and solid cash flow,”
said Kenneth C. Bockhorst, Chairman, President and Chief Executive
Officer. “Another quarter of book to bill above one points to
resilient demand within our markets, and we are confident in our
ability to continue to capitalize on the constructive industry
fundamentals. I want to thank our employees for their steadfast
commitment to serving our customers.”
Second Quarter Operating
Results
Utility water sales increased 32% year-over-year with
broad-based growth across the comprehensive suite of smart water
offerings. This includes robust adoption of our cellular AMI
solution, including higher ORION® Cellular endpoint and BEACON®
Software as a Service (SaaS) revenues, coupled with increased meter
volumes, notably E-Series® Ultrasonic meters. Easing supply chain
conditions and the addition of Syrinix also contributed to the
year-over-year sales increase.
Sales of flow instrumentation products increased 6%
year-over-year, with steady order demand across the water-focused
end markets including wastewater and HVAC, which more than offset
modest growth in the varied other industrial markets.
Gross margin dollars increased $14.7 million year-over-year, and
gross margin as a percent of sales was 39.5%, at the higher end of
the Company’s normalized range and sequentially in line with the
first quarter of 2023. Gross margin continues to benefit from
structural sales mix trends including higher SaaS revenues,
production efficiencies resulting from improving supply chain
conditions, value-based pricing and stabilization of inflationary
pressures.
Selling, engineering and administrative (SEA) expenses in the
second quarter of 2023 were $39.9 million, with SEA as a percent of
sales improving 100 basis points to 22.7% versus 23.7% in the
comparable prior year quarter. The $7.2 million year-over-year
increase in SEA spend included higher personnel-related costs such
as headcount, salaries, sales and management incentives and travel
expenses as well as the addition of Syrinix, including the
associated intangible asset amortization.
Operating profit margin was 16.8% in the second quarter of 2023,
an 80 basis point improvement from the prior year’s 16.0%.
The tax rate for the second quarter of 2023 was 25.8%, 140 basis
points higher than the prior year’s 24.4%. As such, EPS was a
record $0.76, up 33% compared to $0.57 in the comparable prior year
period.
Outlook
Bockhorst continued, “Based on first half results, it’s clear we
are on track for yet another year of exceptional performance. Our
innovative and tailorable smart water solutions portfolio, which
enables customers to be more efficient, resilient and sustainable,
paired with our outstanding team focused on exceptional customer
support, continues to build momentum.
“Our business model provides for durable growth despite
macro-economic uncertainty given the support of our backlog,
secular demand drivers and our technologically differentiated
portfolio of solutions which address increasing water challenges.
While we face tougher comparisons in the second half of 2023, we
continue to expect benefits from stabilizing supply chain and
inflation dynamics for the balance of the year.
“We issued our 2022 Sustainability Report last month
highlighting our continuous improvement efforts across a variety of
ESG matters. Among other accomplishments, we outlined our strong
progress in reducing energy, greenhouse gas (GHG) emissions and
water usage. We have surpassed our original GHG intensity reduction
goal and have established a new goal along with a roadmap of
tactics we believe will lead to further improvements. We remain
proud of our track record of delivering both strong financial and
ESG-related performance.”
Bockhorst concluded, “Badger Meter is well-positioned to sustain
its pattern of profitable growth enhanced by our innovative
offerings, end market resiliency and proven execution. Along with
our strong balance sheet and exceptional team, we are poised to
continue to improve 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 2023 results today, Thursday July 20,
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. Individuals wishing to participate in the call should
use this online registration link:
https://www.netroadshow.com/events/login?show=bf59de12&confld=52890
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 June 30,
Six Months Ended June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Net sales
$
175,858
$
137,833
$
334,959
$
270,235
Cost of sales
106,424
83,073
202,709
164,752
Gross margin
69,434
54,760
132,250
105,483
Selling, engineering and administration
39,932
32,672
77,702
64,533
Operating earnings
29,502
22,088
54,548
40,950
Interest (income) expense, net
(827
)
9
(1,449
)
22
Other pension and postretirement costs
33
33
65
65
Earnings before income taxes
30,296
22,046
55,932
40,863
Provision for income taxes
7,803
5,382
14,024
9,839
Net earnings
$
22,493
$
16,664
$
41,908
$
31,024
Earnings per share:
Basic
$
0.77
$
0.57
$
1.43
$
1.06
Diluted
$
0.76
$
0.57
$
1.42
$
1.06
Shares used in computation of earnings
per share: Basic
29,272,693
29,210,444
29,264,166
29,204,535
Diluted
29,447,525
29,344,351
29,434,467
29,353,708
BADGER METER, INC. CONSOLIDATED CONDENSED BALANCE
SHEETS (in thousands)
Assets
June 30,
December 31,
2023
2022
(Unaudited)
Cash and cash equivalents
$
141,805
$
138,052
Receivables
84,020
76,651
Inventories
144,749
119,856
Other current assets
18,013
13,273
Total current assets
388,587
347,832
Net property, plant and equipment
74,706
73,542
Intangible assets, at cost less accumulated amortization
57,512
53,607
Other long-term assets
24,650
26,805
Goodwill
113,797
101,261
Total assets
$
659,252
$
603,047
Liabilities
and Shareholders' Equity
Payables
$
81,104
$
71,440
Accrued compensation and employee benefits
17,491
20,513
Other current liabilities
20,319
18,359
Total current liabilities
118,914
110,312
Deferred income taxes
6,661
4,648
Long-term employee benefits and other
58,085
45,665
Shareholders' equity
475,592
442,422
Total liabilities and shareholders' equity
$
659,252
$
603,047
BADGER METER, INC.
'CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
'(in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Operating activities: Net earnings
$
22,493
$
16,664
$
41,908
$
31,024
Adjustments to reconcile net earnings to net cash provided by
operations: Depreciation
2,775
2,862
5,438
5,622
Amortization
4,132
3,817
8,416
7,833
Deferred income taxes
(366
)
50
(376
)
16
Noncurrent employee benefits
(185
)
48
(222
)
(64
)
Stock-based compensation expense
1,601
851
2,607
1,466
Changes in: Receivables
340
481
(6,503
)
(12,028
)
Inventories
(12,314
)
(9,260
)
(23,753
)
(13,024
)
Payables
1,145
9,379
8,104
20,128
Prepaid expenses and other assets
(2,847
)
(5,249
)
(4,980
)
(8,153
)
Other current liabilities
5,995
59
10,100
(3,908
)
Total adjustments
276
3,038
(1,169
)
(2,112
)
Net cash provided by operations
22,769
19,702
40,739
28,912
Investing activities:
Property, plant and equipment expenditures
(2,664
)
(1,631
)
(6,935
)
(2,773
)
Acquisitions, net of cash acquired
(75
)
-
(17,127
)
-
Net cash used for investing activities
(2,739
)
(1,631
)
(24,062
)
(2,773
)
Financing activities:
Dividends paid
(6,591
)
(5,843
)
(13,217
)
(11,712
)
Proceeds from exercise of stock options
-
-
58
-
Repurchase of treasury stock
-
(427
)
-
(427
)
Net cash used for financing activities
(6,591
)
(6,270
)
(13,159
)
(12,139
)
Effect of foreign exchange rates on cash
5
(810
)
235
(964
)
Increase in cash and cash equivalents
13,444
10,991
3,753
13,036
Cash and cash equivalents - beginning of period
128,361
89,219
138,052
87,174
Cash and cash equivalents - end of period
$
141,805
$
100,210
$
141,805
$
100,210
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230720259704/en/
Karen Bauer (414) 371-7276 kbauer@badgermeter.com
Badger Meter (NYSE:BMI)
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