8-K
BADGER METER INC (BMI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
| Date of Report | |
|---|---|
| (Date of earliest event reported) | January 29, 2021 |
BADGER METER INC
(Exact name of registrant as specified in its charter)
| Wisconsin | 001-06706 | 39-0143280 |
|---|---|---|
| (State or other<br><br> <br>jurisdiction of<br><br> <br>incorporation) | (Commission File<br><br> <br>Number) | (IRS Employer<br><br> <br>Identification No.) |
4545 W. Brown Deer Rd., Milwaukee, Wisconsin 53223
(Address of principal executive offices, including zip code)
(414) 355-0400
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
_______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | BMI | New York Stock Exchange LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial<br> Condition . |
|---|
On January 29, 2021, Badger Meter, Inc. (the “Company”) issued a press release announcing its quarterly financial results for the 2020 fourth quarter ended December 31, 2020.
A copy of the press release issued by the Company announcing the foregoing is furnished herewith as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits . |
|---|---|
| (a) | Not applicable. |
| (b) | Not applicable. |
| (c) | Not applicable. |
| (d) | Exhibits . The exhibit furnished herewith is as listed in the accompanying Exhibit Index. |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| (99.1) | Badger Meter, Inc. Press Release, dated January 29, 2021. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BADGER METER, INC. | ||
|---|---|---|
| Date: January 29, 2021 | By: | /s/ Robert A. Wrocklage |
| Robert A. Wrocklage | ||
| Senior Vice President – Chief Financial Officer |
Exhibit 99.1
Badger Meter Reports Fourth Quarter and Full Year 2020 Results
MILWAUKEE--(BUSINESS WIRE)--January 29, 2021--Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights
- Total sales of $112.3 million, an increase of 4% compared to $107.6 million in the comparable prior year quarter.
- Net earnings and diluted earnings per share (EPS) were $13.1 million and $0.45, respectively, compared to $12.3 million and $0.42 in the comparable prior year period.
- Deployed $29.1 million, net of cash acquired, for s::can GmbH (“s::can”) effective November 1, 2020, adding online water quality monitoring to existing trusted Badger Meter solutions.
Full Year 2020 Highlights
- Full year 2020 sales of $425.5 million, a slight increase compared to $424.6 million in 2019 reflecting the resiliency of the utility water industry.
- Strong incremental profitability with a 70 basis point increase in operating profit margins.
- Net earnings and diluted earnings per share (EPS) were $49.3 million and $1.69, respectively, compared to $47.2 million and $1.61 in the comparable prior year period.
- Generated $89.6 million of cash provided by operations, an 11% increase year-over-year.
“Badger Meter delivered another quarter of strong performance and an outstanding year in light of the many and varied challenges associated with managing through the pandemic,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “Our performance is the direct result of the durability of our business model and the efforts of our employees across the globe who have helped us safely maintain our operations and serve customers.”
Fourth Quarter Operating Results
Utility water sales increased 8% from the strong comparable prior year quarter, with the acquisition of s::can contributing approximately 3% of the sales increase. Existing AMI \(advanced metering infrastructure\) project
installation schedules progressed and we experienced growth in sales of ultrasonic meters and ORION^®^ Cellular radios with related BEACON^®^ Software as a Service \(SaaS\). Sales of flow instrumentation products were 10% lower
year-over-year, sequentially improved from the third quarter, yet continuing to reflect the sluggish activity across most of the varied industrial end markets served.
Operating margins of 15.1% were 10 basis points lower than the prior year’s 15.2%. Gross margin increased $2.9 million year-over-year, and gross margin percent increased 100 basis points to 39.2% from the prior year’s 38.2%. The quarter benefitted from favorable sales mix with higher SaaS, cellular radio and ultrasonic meter sales and favorable facility utilization. Margins were also supported by positive price/cost dynamics, the result of strategic pricing initiatives in advance of rising brass input costs. These benefits were partially offset by a discrete network sunset provision associated with future equipment upgrades for early-stage Code Division Multiple Access (“CDMA”) radio endpoints for a limited number of North American customers, along with the acquisition-related fair value step-up of acquired s::can inventory.
Selling, engineering and administration (“SEA”) expenses in the fourth quarter of 2020 of $27.1 million increased $2.3 million from the prior year’s $24.8 million with the inclusion of s::can and resulting acquisition-related intangible amortization along with higher personnel costs, partially offset by lower travel and other pandemic-impacted expenses. SEA leverage was 24.1% up from 23.0% in the comparable prior year quarter. The tax rate of 22.6% was modestly lower than the prior year’s 24.3%.
Full Year Recap and Outlook
Bockhorst continued, “Recapping 2020, our team successfully supported customers while managing through the unprecedented health and economic crisis. With the backdrop of countless changes to how we all do business, Badger Meter
delivered utility water revenue growth, EBITDA margin and EPS expansion, robust working capital management and free cash flow, and strategic execution of our capital allocation priorities with accretive acquisitions and dividend growth. We are
excited about the acquisition of s::can completed in the quarter and the recently announced acquisition of Analytical Technology, Inc. \(“ATi\) effective January 1, 2021. These accomplishments are a testament to the criticality of the water
industry and the exceptional Badger Meter team.”
“While we anticipate the overall economic environment will remain uncertain, we are confident in our strategic growth plans and the fundamental long-term drivers of our offerings. Leveraging our industry-leading ORION^®^ Cellular endpoints, along with current and future communication and software technologies, we are creating robust digital solutions to operationalize real-time data into actionable insights that drive better results and optimize operations. The inclusion of the recently acquired s::can and ATi portfolio of comprehensive and scalable water quality monitoring solutions will now allow us to deliver real-time water quality data to our customers. Access to real-time, on demand water quality parameters will enable water utilities to improve operational security, awareness and efficiency, while our industrial customers will benefit from process and discharge water quality monitoring.”
“Our order backlog, sales momentum, and encouraging pipeline of potential business gives us confidence as we start the new year. Our teams continue to focus on what we can control as we serve our customers and maintain safe operating environments. While strategic pricing initiatives have and continue to be implemented, the recent rapid and significant escalation in brass costs may be an impediment to near-term margin expansion opportunities.”
Bockhorst concluded, "Badger Meter is a company that has successfully managed through challenges over its 115-year history, and this pandemic is no exception. We are fortunate to navigate through this environment from a position of strength. We believe that the combination of our talented team, resilient portfolio of solutions and strong balance sheet uniquely position Badger Meter for success in 2021 and beyond as we work to protect the world’s most precious resource.”
Conference Call and Webcast Information
Badger Meter management will hold a conference call to discuss 2020 results today, January 29, 2021 at 10:00 AM CT/11:00 AM ET. The call and related presentation can be accessed via webcast through the Investor section of our
website. Participants can register to take part in the call using this online registration link: http://www.directeventreg.com/registration/event/6277158. After registering, instructions will be shared on how to join the call. If online
registration is unavailable, registration can also be accomplished by calling 888-869-1189 or 706-643-5902 and providing the conference ID number: 6277158. 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 duration, severity and geographic spread of the COVID-19 pandemic,
government actions to address or mitigate the impact of the COVID-19 pandemic, and the potential 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 | Twelve Months Ended | ||||||||
| December 31, | December 31, | December 31, | December 31, | ||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| (Unaudited) | (Unaudited) | ||||||||
| Net sales | $ | 112,329 | $ | 107,556 | $ | 425,544 | $ | 424,625 | |
| Cost of sales | 68,274 | 66,431 | 257,295 | 261,097 | |||||
| Gross margin | 44,055 | 41,125 | 168,249 | 163,528 | |||||
| Selling, engineering and administration | 27,093 | 24,782 | 103,093 | 101,380 | |||||
| Operating earnings | 16,962 | 16,343 | 65,156 | 62,148 | |||||
| Interest expense (income), net | 12 | (27 | ) | 30 | 253 | ||||
| Other pension and postretirement costs | 36 | 165 | 145 | 288 | |||||
| Earnings before income taxes | 16,914 | 16,205 | 64,981 | 61,607 | |||||
| Provision for income taxes | 3,820 | 3,931 | 15,638 | 14,430 | |||||
| Net earnings | $ | 13,094 | $ | 12,274 | $ | 49,343 | $ | 47,177 | |
| Earnings per share: | |||||||||
| Basic | $ | 0.45 | $ | 0.42 | $ | 1.70 | $ | 1.63 | |
| Diluted | $ | 0.45 | $ | 0.42 | $ | 1.69 | $ | 1.61 | |
| Shares used in computation of earnings per share: | |||||||||
| Basic | 29,057,249 | 29,039,296 | 29,052,301 | 29,028,204 | |||||
| Diluted | 29,257,929 | 29,227,804 | 29,229,868 | 29,220,165 |
| BADGER METER, INC. | ||||
|---|---|---|---|---|
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||
| (in thousands) | ||||
| Assets | December 31, | December 31, | ||
| 2020 | 2019 | |||
| (Unaudited) | ||||
| Cash and cash equivalents | $ | 72,273 | $ | 48,871 |
| Receivables | 61,689 | 61,365 | ||
| Inventories | 81,586 | 81,948 | ||
| Other current assets | 5,303 | 7,910 | ||
| Total current assets | 220,851 | 200,094 | ||
| Net property, plant and equipment | 82,705 | 85,761 | ||
| Intangible assets, at cost less accumulated amortization | 53,598 | 48,163 | ||
| Other long-term assets | 22,518 | 16,617 | ||
| Goodwill | 88,708 | 71,258 | ||
| Total assets | $ | 468,380 | $ | 421,893 |
| Liabilities and Shareholders' Equity | ||||
| Short-term debt | $ | - | $ | 4,480 |
| Payables | 34,923 | 31,523 | ||
| Accrued compensation and employee benefits | 14,617 | 12,754 | ||
| Other current liabilities | 15,659 | 8,490 | ||
| Total current liabilities | 65,199 | 57,247 | ||
| Deferred income taxes | 5,696 | 876 | ||
| Long-term employee benefits and other | 36,226 | 32,702 | ||
| Shareholders' equity | 361,259 | 331,068 | ||
| Total liabilities and shareholders' equity | $ | 468,380 | $ | 421,893 |
| BADGER METER, INC. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Operating activities: | ||||||||||||
| Net earnings | $ | 13,094 | $ | 12,274 | $ | 49,343 | $ | 47,177 | ||||
| Adjustments to reconcile net earnings to net cash provided by operations: | ||||||||||||
| Depreciation | 3,121 | 2,881 | 12,253 | 11,569 | ||||||||
| Amortization | 3,160 | 3,254 | 12,963 | 12,577 | ||||||||
| Deferred income taxes | (3,483 | ) | (1,542 | ) | (3,082 | ) | (1,524 | ) | ||||
| Noncurrent employee benefits | (365 | ) | 110 | 206 | (40 | ) | ||||||
| Stock-based compensation expense | 374 | 332 | 1,415 | 1,214 | ||||||||
| Changes in: | ||||||||||||
| Receivables | (148 | ) | 896 | 3,036 | 5,451 | |||||||
| Inventories | (59 | ) | 3,039 | 5,129 | (1,220 | ) | ||||||
| Payables | (6,876 | ) | 757 | (391 | ) | 11,642 | ||||||
| Prepaid expenses and other current assets | (1,347 | ) | (1,926 | ) | (3,522 | ) | (7,732 | ) | ||||
| Other current liabilities | 8,429 | (500 | ) | 12,228 | 1,600 | |||||||
| Total adjustments | 2,806 | 7,301 | 40,235 | 33,537 | ||||||||
| Net cash provided by operations | 15,900 | 19,575 | 89,578 | 80,714 | ||||||||
| Investing activities: | ||||||||||||
| Property, plant and equipment expenditures | (3,204 | ) | (1,907 | ) | (9,059 | ) | (7,496 | ) | ||||
| Acquisitions, net of cash acquired | (29,134 | ) | - | (29,134 | ) | - | ||||||
| Net cash used for investing activities | (32,338 | ) | (1,907 | ) | (38,193 | ) | (7,496 | ) | ||||
| Financing activities: | ||||||||||||
| Net decrease short-term debt | - | - | (4,600 | ) | (13,500 | ) | ||||||
| Payment of contingent acquisition consideration | (1,001 | ) | (905 | ) | (1,001 | ) | (2,555 | ) | ||||
| Dividends paid | (5,232 | ) | (4,943 | ) | (20,340 | ) | (18,595 | ) | ||||
| Proceeds from exercise of stock options | 553 | 998 | 1,058 | 1,961 | ||||||||
| Repurchase of treasury stock | (182 | ) | (1,848 | ) | (3,116 | ) | (5,207 | ) | ||||
| Issuance of treasury stock | 54 | 44 | 180 | 187 | ||||||||
| Net cash used for financing activities | (5,808 | ) | (6,654 | ) | (27,819 | ) | (37,709 | ) | ||||
| Effect of foreign exchange rates on cash | 618 | 129 | (164 | ) | 276 | |||||||
| (Decrease) Increase in cash and cash equivalents | (21,628 | ) | 11,143 | 23,402 | 35,785 | |||||||
| Cash and cash equivalents - beginning of period | 93,901 | 37,728 | 48,871 | 13,086 | ||||||||
| Cash and cash equivalents - end of period | $ | 72,273 | $ | 48,871 | $ | 72,273 | $ | 48,871 |
Contacts
Karen Bauer at (414) 371-7276 kbauer@badgermeter.com