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) | July 20, 2023 |
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 |
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 July 20, 2023, Badger Meter, Inc. (the “Company”) issued a press release announcing its quarterly financial results for the second quarter ended June 30, 2023.
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<br> Meter, Inc. Press Release, dated July 20, 2023. |
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: July 20, 2023 | By: | /s/ Robert A. Wrocklage |
| Robert A. Wrocklage | ||
| Senior Vice President – Chief Financial Officer |
Exhibit 99.1
Badger Meter Reports Record Second Quarter 2023 Financial Results
MILWAUKEE--(BUSINESS WIRE)--July 20, 2023--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 |
Contacts
Karen Bauer
\(414\) 371-7276
kbauer@badgermeter.com