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 26, 2024 |
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 Condition . |
|---|
On January 26, 2024, Badger Meter, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 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<br> the accompanying Exhibit Index. |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| (99.1) | Badger Meter, Inc. Press Release, dated January 26, 2024. |
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 26, 2024 | 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 2023 Financial Results
MILWAUKEE--(BUSINESS WIRE)--January 26, 2024--Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Highlights
- Total sales of $182.4 million, 24% higher than the prior year’s $147.3 million.
- Operating profit increased 43% year-over-year, with operating profit margins expanding 230 basis points to 17.6% from 15.3%.
- Diluted earnings per share (EPS) increased 40% to $0.84, up from $0.60 in the comparable prior year quarter.
- Record cash flow with $37.9 million in net cash provided by operations, increasing 28% over the prior year.
Full Year 2023 Highlights
- Record total sales of $703.6 million, 24% higher than the prior year’s $565.6 million.
- Software sales exceeded $42 million, increasing 27% year-over-year.
- Operating profit margins improved 140 basis points over the prior year to 16.8%.
- Diluted EPS increased 39% to a record $3.14, up from $2.26 in the prior year.
- Record cash flow with $110.1 million in net cash provided by operations.
Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer, stated, “Our strong fourth quarter results capped off a stellar 2023 with continuing robust demand and operational execution. We delivered 24% sales growth in the fourth quarter with record operating profit margins of 17.6% and record cash flow. Shortly after year-end, we completed the tuck-in acquisition of select remote water monitoring assets, expanding the breadth of our smart water offerings in line with our strategic objectives. I want to thank the Badger Meter team for delivering another year of exceptional performance driven by their unrelenting commitment to our customers.”
Fourth Quarter Operating Results
Utility water sales increased 28% year-over-year with strong growth across the broad suite of digital smart water solutions. This includes robust adoption rates for our cellular AMI offering, including higher ORION^®^ Cellular endpoint and BEACON^®^ Software as a Service (SaaS) revenues, as well as increased E-Series^®^ Ultrasonic meters sales. Higher water quality and pressure monitoring sales also contributed to the year-over-year sales increase.
Sales of flow instrumentation products were up slightly year-over-year, the result of steady order demand across the water-focused end markets including wastewater and HVAC, which offset anticipated modest sales declines in the de-emphasized general industrial markets.
Operating earnings increased an exceptional 43% year-over-year, with operating profit margins expanding 230 basis points to a record 17.6% in the fourth quarter of 2023, up from the prior year’s 15.3%. Gross margin dollars increased $14.5 million year-over-year, and gross margin as a percent of sales was 39.2%, an increase of 50 basis points over the comparable prior year quarter. Gross margins continue to benefit from higher volumes and structural positive sales mix trends.
Selling, engineering and administrative (SEA) expenses in the fourth quarter of 2023 were $39.4 million, with SEA as a percent of sales improving 180 basis points to 21.6% versus 23.4% in the comparable prior year quarter. The $4.9 million year-over-year increase in SEA spend included higher personnel-related costs such as headcount, salaries, and management incentives as well as the addition of Syrinix, including the associated intangible asset amortization.
The tax rate for the fourth quarter of 2023 was 26.1% compared to 23.4% in the prior year comparable quarter. EPS was a record $0.84, up 40% compared to $0.60 in the comparable prior year period.
Full Year Recap and Outlook
Bockhorst continued, “In 2023, Badger Meter continued to build on our track record of differentiated performance, delivering 24% year-over-year sales growth, record operating profit margins and a 39% increase in EPS. Our strategic actions, including continued investments in hardware and software innovation, incremental manufacturing capacity and tuck-in acquisitions have enabled us to further capitalize on the robust demand for our comprehensive and tailorable digital water management offerings. These customized solutions deliver efficiency, resiliency, and sustainability for customers to address the variety of persistent challenges facing the water industry.
“For 2024 and beyond, we remain committed to the formula that has driven our success - focusing on our customers, offering innovative and differentiated technologies, and driving operational excellence. This proven blueprint, coupled with our resilient order pace, robust bid funnel and backlog, give us confidence in our ability to grow sales and earnings year-over-year.”
Bockhorst concluded, “We believe we are well-positioned with the right strategies, ample capital and an exceptional team to continue to drive strong shareholder returns while protecting 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 2023 results today, Friday January 26, 2024 at 10:00 AM Central/11:00 AM Eastern time. The webcast and related presentation can be accessed via the Investor section of the Company’s website. Individuals wishing to participate in the call should use this online registration link: https://www.netroadshow.com/events/login?show=aac253b1&confId=59366
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, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Net sales | $ | 182,440 | $ | 147,324 | $ | 703,592 | $ | 565,568 | ||||
| Cost of sales | 110,975 | 90,359 | 427,154 | 345,598 | ||||||||
| Gross margin | 71,465 | 56,965 | 276,438 | 219,970 | ||||||||
| Selling, engineering and administration | 39,386 | 34,491 | 158,389 | 132,675 | ||||||||
| Operating earnings | 32,079 | 22,474 | 118,049 | 87,295 | ||||||||
| Interest income, net | (1,398 | ) | (465 | ) | (4,047 | ) | (552 | ) | ||||
| Other pension and postretirement costs | 33 | 33 | 130 | 130 | ||||||||
| Earnings before income taxes | 33,444 | 22,906 | 121,966 | 87,717 | ||||||||
| Provision for income taxes | 8,723 | 5,367 | 29,368 | 21,221 | ||||||||
| Net earnings | $ | 24,721 | $ | 17,539 | $ | 92,598 | $ | 66,496 | ||||
| Earnings per share: | ||||||||||||
| Basic | $ | 0.84 | $ | 0.60 | $ | 3.16 | $ | 2.28 | ||||
| Diluted | $ | 0.84 | $ | 0.60 | $ | 3.14 | $ | 2.26 | ||||
| Shares used in computation of earnings per share: | ||||||||||||
| Basic | 29,305,864 | 29,230,963 | 29,284,396 | 29,218,486 | ||||||||
| Diluted | 29,471,418 | 29,406,499 | 29,455,557 | 29,376,077 |
| BADGER METER, INC. | ||||
|---|---|---|---|---|
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||
| (in thousands) | ||||
| Assets | December 31, | December 31, | ||
| 2023 | 2022 | |||
| (Unaudited) | ||||
| Cash and cash equivalents | $ | 191,782 | $ | 138,052 |
| Receivables | 83,507 | 76,651 | ||
| Inventories | 153,674 | 119,856 | ||
| Other current assets | 13,214 | 13,273 | ||
| Total current assets | 442,177 | 347,832 | ||
| Net property, plant and equipment | 73,878 | 73,542 | ||
| Intangible assets, at cost less accumulated amortization | 53,737 | 53,607 | ||
| Other long-term assets | 33,964 | 26,805 | ||
| Goodwill | 113,163 | 101,261 | ||
| Total assets | $ | 716,919 | $ | 603,047 |
| Liabilities and Shareholders' Equity | ||||
| Payables | $ | 81,807 | $ | 71,440 |
| Accrued compensation and employee benefits | 29,871 | 20,513 | ||
| Other current liabilities | 20,270 | 18,359 | ||
| Total current liabilities | 131,948 | 110,312 | ||
| Deferred income taxes | 5,061 | 4,648 | ||
| Long-term employee benefits and other | 63,428 | 45,665 | ||
| Shareholders' equity | 516,482 | 442,422 | ||
| Total liabilities and shareholders' equity | $ | 716,919 | $ | 603,047 |
| BADGER METER, INC. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Operating activities: | ||||||||||||
| Net earnings | $ | 24,721 | $ | 17,539 | $ | 92,598 | $ | 66,496 | ||||
| Adjustments to reconcile net earnings to net cash provided by operations: | ||||||||||||
| Depreciation | 2,837 | 2,677 | 10,937 | 11,090 | ||||||||
| Amortization | 4,353 | 3,403 | 17,173 | 15,151 | ||||||||
| Deferred income taxes | (9,249 | ) | (5,643 | ) | (9,650 | ) | (5,619 | ) | ||||
| Noncurrent employee benefits | (64 | ) | (510 | ) | (338 | ) | (648 | ) | ||||
| Stock-based compensation expense | 1,225 | 978 | 5,188 | 3,148 | ||||||||
| Changes in: | ||||||||||||
| Receivables | 5,504 | 7,532 | (6,351 | ) | (11,328 | ) | ||||||
| Inventories | (4,839 | ) | (4,814 | ) | (32,467 | ) | (21,021 | ) | ||||
| Payables | (3,776 | ) | 4,137 | 8,506 | 28,007 | |||||||
| Prepaid expenses and other assets | 267 | (1,152 | ) | (7,012 | ) | (10,557 | ) | |||||
| Other liabilities | 16,966 | 5,561 | 31,533 | 7,732 | ||||||||
| Total adjustments | 13,224 | 12,169 | 17,519 | 15,955 | ||||||||
| Net cash provided by operations | 37,945 | 29,708 | 110,117 | 82,451 | ||||||||
| Investing activities: | ||||||||||||
| Property, plant and equipment expenditures | (2,054 | ) | (1,201 | ) | (12,003 | ) | (5,891 | ) | ||||
| Acquisitions, net of cash acquired | - | - | (17,127 | ) | - | |||||||
| Net cash used for investing activities | (2,054 | ) | (1,201 | ) | (29,130 | ) | (5,891 | ) | ||||
| Financing activities: | ||||||||||||
| Dividends paid | (7,918 | ) | (6,589 | ) | (29,052 | ) | (24,881 | ) | ||||
| Proceeds from exercise of stock options | - | 642 | 967 | 703 | ||||||||
| Repurchase of treasury stock | - | - | - | (427 | ) | |||||||
| Net cash used for financing activities | (7,918 | ) | (5,947 | ) | (28,085 | ) | (24,605 | ) | ||||
| Effect of foreign exchange rates on cash | 899 | 705 | 828 | (1,077 | ) | |||||||
| Increase in cash and cash equivalents | 28,872 | 23,265 | 53,730 | 50,878 | ||||||||
| Cash and cash equivalents - beginning of period | 162,910 | 114,787 | 138,052 | 87,174 | ||||||||
| Cash and cash equivalents - end of period | $ | 191,782 | $ | 138,052 | $ | 191,782 | $ | 138,052 |
Contacts
Karen Bauer
\(414\) 371-7276
kbauer@badgermeter.com