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, 2022 |
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 July 20, 2022, Badger Meter, Inc. (the “Company”) issued a press release announcing its quarterly financial results for the second quarter ended June 30, 2022.
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<br> Release, dated July 20, 2022. |
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, 2022 | By: | /s/ Robert A. Wrocklage |
| Robert A. Wrocklage | ||
| Senior Vice President – Chief Financial Officer |
Exhibit 99.1
Badger Meter Reports Second Quarter 2022 Results
MILWAUKEE--(BUSINESS WIRE)--July 20, 2022--Badger Meter, Inc. (NYSE: BMI) today reported results for the second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
- Total sales of $137.8 million increased 12% over the prior year’s $122.9 million. Excluding the unfavorable impact of the stronger US dollar, sales increased nearly 14%
- Diluted earnings per share (EPS) increased 19% to $0.57 compared to $0.48 in the comparable prior year period
- Operating profit margins expanded 80 basis points year-over-year
- Robust demand environment continued with strong order pace and record backlog
- Strong cash flow with $19.7 million in net cash provided by operations
“Record sales for the second quarter were the result of continued strong customer demand, effective supply chain management and continued price realization. Operating margins improved year-over-year despite persistent cost inflation, and we continued to experience robust orders and correspondingly, a further expansion of our already record-high backlog,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “I want to thank the global Badger Meter team for their tireless commitment to serving our customers.”
Second Quarter Operating Results
Utility water sales increased 14% year-over-year, representing the third consecutive quarter of mid-teens sales growth. The sales increase in the quarter was most notable in E-Series^®^ Ultrasonic meters, ORION^®^ Cellular endpoints and BEACON^®^ SaaS revenue. Backlog grew as continued strong order momentum more than offset the recovering production output, as sporadic supply chain constraints limited the conversion of utility water orders to net sales.
Sales of flow instrumentation products increased 4% year-over-year, the result of strong order demand across most end market applications partially offset by supply chain constraints that impacted manufacturing output.
Operating margin was 16.0% in the second quarter of 2022, an 80 basis point improvement from the prior year’s 15.2%. Gross margin as a percent of sales was 39.7%, an increase of 140 basis points sequentially, as the pacing of price realization and manufacturing output improved. Gross margin as a percent of sales declined from the prior year’s 40.8%, as expected, as elevated material, logistics and other costs were partially offset by higher sales volumes and pricing gains.
Selling, engineering and administration (“SEA”) expenses in the second quarter of 2022 were $32.7 million, or 23.7% as a percent of sales, compared to $31.4 million, and 25.6% in the comparable prior year quarter. The $1.3 million spending increase was due to higher personnel and travel expenses, while the year-over-year improvement in SEA expense leverage is the result of effective spending controls and higher sales.
The tax rate for the second quarter of 2022 was 24.4%, modestly lower than the prior year’s 25.0%. As a result of the above, EPS increased 19% year-over-year, to $0.57 compared to $0.48 in the comparable prior year period.
Outlook
Bockhorst added, “We continue to experience strong demand for our digital water solutions coupled with modestly improving supply chain conditions. Our supply chain execution, along with pricing actions aligned with the value we deliver, are working to mitigate the inflation pressures of the past year. Our demonstrated capability to navigate external challenges and capitalize on the robust demand environment differentiates Badger Meter.
The positive industry fundamentals driving demand, including customer requirements to enhance operational efficiency, security and sustainability, are resilient. Badger Meter solutions harness the power of our smart devices, advanced ORION cellular communication technology and BEACON software for the remote monitoring and management of water networks to address these customer challenges.
We continue to advance our ESG-related priorities and have highlighted our progress in the recently published 2020-2021 Sustainability Report. We are proud to have recently been recognized as a Manufacturing Industry Top Workplaces Award recipient, which is especially meaningful given the employee survey feedback that garnered the award.
Bockhorst concluded, “While we are mindful of the uncertain macroeconomic conditions, our durable business model, increasing digital solutions mix, proven execution and our strong balance sheet position us well to deliver sustainable sales growth and 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 2022 results today, Wednesday July 20, 2022 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. Participants can also register to take part in the call using this online registration link: https://ige.netroadshow.com/registration/q4inc/11203/badger-meter-inc-second-quarter-2022-earnings/. 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 possible ongoing 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 June 30, | Six Months Ended June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
| Net sales | $ | 137,833 | $ | 122,869 | $ | 270,235 | $ | 240,711 |
| Cost of sales | 83,073 | 72,767 | 164,752 | 141,247 | ||||
| Gross margin | 54,760 | 50,102 | 105,483 | 99,464 | ||||
| Selling, engineering and administration | 32,672 | 31,427 | 64,533 | 63,042 | ||||
| Operating earnings | 22,088 | 18,675 | 40,950 | 36,422 | ||||
| Interest expense, net | 9 | 7 | 22 | 14 | ||||
| Other pension and postretirement costs | 33 | 29 | 65 | 60 | ||||
| Earnings before income taxes | 22,046 | 18,639 | 40,863 | 36,348 | ||||
| Provision for income taxes | 5,382 | 4,667 | 9,839 | 8,595 | ||||
| Net earnings | $ | 16,664 | $ | 13,972 | $ | 31,024 | $ | 27,753 |
| Earnings per share: | ||||||||
| Basic | $ | 0.57 | $ | 0.48 | $ | 1.06 | $ | 0.95 |
| Diluted | $ | 0.57 | $ | 0.48 | $ | 1.06 | $ | 0.95 |
| Shares used in computation of earnings per share: | ||||||||
| Basic | 29,210,444 | 29,114,346 | 29,204,535 | 29,105,429 | ||||
| Diluted | 29,344,351 | 29,312,174 | 29,353,708 | 29,313,392 |
| BADGER METER, INC. | ||||
|---|---|---|---|---|
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||
| (in thousands) | ||||
| Assets | June 30, | December 31, | ||
| 2022 | 2021 | |||
| (Unaudited) | ||||
| Cash and cash equivalents | $ | 100,210 | $ | 87,174 |
| Receivables | 77,247 | 65,866 | ||
| Inventories | 111,437 | 99,611 | ||
| Other current assets | 15,027 | 8,709 | ||
| Total current assets | 303,921 | 261,360 | ||
| Net property, plant and equipment | 74,040 | 78,050 | ||
| Intangible assets, at cost less accumulated amortization | 57,772 | 64,176 | ||
| Other long-term assets | 23,092 | 22,919 | ||
| Goodwill | 101,206 | 104,313 | ||
| Total assets | $ | 560,031 | $ | 530,818 |
| Liabilities and Shareholders' Equity | ||||
| Payables | $ | 61,597 | $ | 41,859 |
| Accrued compensation and employee benefits | 14,941 | 20,644 | ||
| Other current liabilities | 20,797 | 19,643 | ||
| Total current liabilities | 97,335 | 82,146 | ||
| Deferred income taxes | 4,937 | 5,385 | ||
| Long-term employee benefits and other | 41,576 | 40,217 | ||
| Shareholders' equity | 416,183 | 403,070 | ||
| Total liabilities and shareholders' equity | $ | 560,031 | $ | 530,818 |
| BADGER METER, INC. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
| Operating activities: | ||||||||||||
| Net earnings | $ | 16,664 | $ | 13,972 | $ | 31,024 | $ | 27,753 | ||||
| Adjustments to reconcile net earnings to net cash provided by operations: | ||||||||||||
| Depreciation | 2,862 | 2,990 | 5,622 | 5,863 | ||||||||
| Amortization | 3,817 | 4,022 | 7,833 | 8,088 | ||||||||
| Deferred income taxes | 50 | 7 | 16 | 45 | ||||||||
| Noncurrent employee benefits | 48 | 79 | (64 | ) | 160 | |||||||
| Stock-based compensation expense | 851 | 573 | 1,466 | 947 | ||||||||
| Changes in: | ||||||||||||
| Receivables | 481 | (2,242 | ) | (12,028 | ) | 1,622 | ||||||
| Inventories | (9,260 | ) | (6,096 | ) | (13,024 | ) | (4,812 | ) | ||||
| Payables | 9,379 | 1,075 | 20,128 | 5,366 | ||||||||
| Prepaid expenses and other current assets | (5,249 | ) | (831 | ) | (8,153 | ) | (1,259 | ) | ||||
| Other current liabilities | 59 | 964 | (3,908 | ) | 1,296 | |||||||
| Total adjustments | 3,038 | 541 | (2,112 | ) | 17,316 | |||||||
| Net cash provided by operations | 19,702 | 14,513 | 28,912 | 45,069 | ||||||||
| Investing activities: | ||||||||||||
| Property, plant and equipment expenditures | (1,631 | ) | (2,619 | ) | (2,773 | ) | (4,378 | ) | ||||
| Acquisitions, net of cash acquired | - | 55 | - | (44,506 | ) | |||||||
| Net cash used for investing activities | (1,631 | ) | (2,564 | ) | (2,773 | ) | (48,884 | ) | ||||
| Financing activities: | ||||||||||||
| Dividends paid | (5,843 | ) | (5,240 | ) | (11,712 | ) | (10,479 | ) | ||||
| Proceeds from exercise of stock options | - | - | - | 352 | ||||||||
| Repurchase of treasury stock | (427 | ) | (460 | ) | (427 | ) | (460 | ) | ||||
| Issuance of treasury stock | - | 30 | - | 72 | ||||||||
| Net cash used for financing activities | (6,270 | ) | (5,670 | ) | (12,139 | ) | (10,515 | ) | ||||
| Effect of foreign exchange rates on cash | (810 | ) | (322 | ) | (964 | ) | (584 | ) | ||||
| Increase (decrease) in cash and cash equivalents | 10,991 | 5,957 | 13,036 | (14,914 | ) | |||||||
| Cash and cash equivalents - beginning of period | 89,219 | 51,402 | 87,174 | 72,273 | ||||||||
| Cash and cash equivalents - end of period | $ | 100,210 | $ | 57,359 | $ | 100,210 | $ | 57,359 |
Contacts
Karen Bauer
\(414\) 371-7276
kbauer@badgermeter.com