Badger Meter Reports Second Quarter 2021 Results

MILWAUKEE--()--Badger Meter, Inc. (NYSE: BMI) today reported results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

  • Total sales increased 35% to a record $122.9 million, compared to $91.1 million in the comparable prior year quarter.
  • Diluted earnings per share (EPS) were $0.48, an increase of 45% over $0.33 in the comparable prior year period.
  • Robust order pace and record high backlog exiting the quarter.
  • Strong sales and profitability contributions from the recent water quality acquisitions of s::can and ATi.

“Badger Meter executed well in the quarter, delivering record sales and strong earnings,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “Order rates remained robust, carrying-on the momentum from the first quarter as utility customers continued to select our innovative digital water technologies, and global flow instrumentation market activity stabilized. Conversion of orders into sales remained hampered by strained electronic and other component availability, along with logistics challenges, resulting in a further expansion of our already record-high backlog. I want to thank the Badger Meter team for admirably managing through these dynamic market conditions in support of our customers.”

Second Quarter Operating Results

Strong order activity, the addition of the water quality acquisitions, and an easier coronavirus-related prior year comparison, led to a 38% year-over-year increase in utility water sales. Excluding the $12.2 million sales contribution from acquisitions, core utility water sales increased 22% over the prior year with growth in BEACON® SaaS revenue, strong AMR and ORION® cellular-based AMI demand, and favorable value-based pricing realization. Utility water backlog reached another record milestone as robust order momentum exceeded sales in the quarter, the result of sporadic supply chain disruptions which limited manufacturing output.

Sales of flow instrumentation products also grew 22% year-over-year. Stabilizing order trends globally, combined with an easier prior year comparison, led to the double digit increase across the array of end markets and applications.

Operating margins of 15.2% were 130 basis points higher than the prior year’s 13.9%. Gross margin dollars increased $14.3 million year-over-year, and gross margin percent improved 150 basis points to 40.8% from the prior year’s 39.3%. The quarter benefitted from favorable acquisition and product sales mix, including higher SaaS revenues, as well as the benefit of value-based pricing initiatives. These benefits were modestly offset by the impact of higher brass and other supply chain and logistics costs.

Selling, engineering and administration (“SEA”) expenses in the second quarter of 2021 of $31.4 million increased $8.2 million from the prior year’s $23.2 million which encompassed employee furlough and other expense reduction actions taken in response to COVID-19 lockdowns. The current year expense includes the water quality acquisitions, including the resultant intangible asset amortization. The tax rate of 25.0% was modestly higher than the prior year’s 24.3%.

Strategic Review and Outlook

Bockhorst continued, “Our expanding portfolio of end-to-end smart water offerings bring flexibility, insight and proactive intelligence for optimal water management to our customers. The sustained high order level is evidence that utility and industrial customers are willing to invest in our innovative and industry leading solutions. We remain focused on converting our robust order book, opportunity pipeline and existing record backlog into sales as we continue to navigate the broad-based waves of component shortages, allocations and lengthened lead times that we anticipate will persist at least through the remainder of the year. In addition, we are generating strong profitability amidst what is a more challenging price/cost environment, with our focus on value-based pricing. Finally, we are advancing the already strong progress on acquisition integration and execution of related growth strategies.

"Our strong cash flow and credit availability provide us with ample financial flexibility to execute our capital allocation priorities and invest in growth. We recently upsized our credit facility to $150 million, adding an accordion and other features as part of the replacement of our expiring facility. We currently have no outstanding borrowings on the credit facility.”

Bockhorst concluded, "Badger Meter has a proven portfolio of solutions to solve customers’ water management needs. Healthy demand for these innovative and trusted offerings, along with our strong balance sheet, give us confidence in our long term growth outlook as we help to preserve 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 2021 results today, Tuesday July 20, 2021 at 10:00 AM Central/11:00 AM Eastern time. The call and related presentation can be accessed via webcast through the Investor section of our website. Participants can also register to take part in the call using this online registration link: http://www.directeventreg.com/registration/event/1439059. 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:1439059. 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. The words “anticipate,” “believe,” “estimate,” “expect,” “think,” “should,” “could” and “objective” or similar expressions are intended to identify forward looking statements. All such forward looking statements are based on the company’s then current views and assumptions and involve risks and uncertainties. Potential factors that could affect such forward-looking statements include the duration and severity of the COVID-19 pandemic and its impact on the company’s operations and those of our customers and suppliers. Other potential factors include the company’s ability to develop and manufacture technologically advanced products that are accepted by the market, supply chain risk, legal and regulatory risks, political and general economic risks, risks related to doing business in foreign countries, including foreign currency risk, competition for skilled employees, material and labor cost increases, competitive pricing and operating efficiencies, the effects of climate change, cybersecurity attacks and disruptions to our information technology and the successful integration of acquisitions. See the company’s Form 10-K filed with the SEC for further information regarding risk factors, which are incorporated herein by reference. The company 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 Six Months Ended
June 30, June 30, June 30, June 30,

2021

2020

2021

2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Net sales

$

122,869

$

91,119

$

240,711

$

199,627

 
Cost of sales

 

72,767

 

55,269

 

141,247

 

120,455

 
Gross margin

 

50,102

 

35,850

 

99,464

 

79,172

 
Selling, engineering and administration

 

31,427

 

23,186

 

63,042

 

50,493

 
Operating earnings

 

18,675

 

12,664

 

36,422

 

28,679

 
Interest expense, net

 

7

 

32

 

14

 

63

Other pension and postretirement costs

 

29

 

44

 

60

 

88

 
Earnings before income taxes

 

18,639

 

12,588

 

36,348

 

28,528

 
Provision for income taxes

 

4,667

 

3,054

 

8,595

 

7,140

 
Net earnings

$

13,972

$

9,534

$

27,753

$

21,388

 
Earnings per share:
 
Basic

$

0.48

$

0.33

$

0.95

$

0.74

 
Diluted

$

0.48

$

0.33

$

0.95

$

0.73

 
Shares used in computation of earnings per share:
 
Basic

 

29,114,346

 

29,047,297

 

29,105,429

 

29,046,277

 
Diluted

 

29,312,174

 

29,265,719

 

29,313,392

 

29,246,367

 
BADGER METER, INC.
 
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
 
 

Assets

June 30, December 31,

2021

2020

(Unaudited)
 
Cash and cash equivalents

$

57,359

$

72,273

Receivables

 

63,951

 

61,689

Inventories

 

90,793

 

81,586

Other current assets

 

7,210

 

5,303

Total current assets

 

219,313

 

220,851

 
Net property, plant and equipment

 

81,582

 

82,705

Intangible assets, at cost less accumulated amortization

 

70,178

 

53,598

Other long-term assets

 

22,312

 

22,518

Goodwill

 

105,631

 

88,708

Total assets

$

499,016

$

468,380

 
 

Liabilities and Shareholders' Equity

 
Payables

$

41,252

$

34,923

Accrued compensation and employee benefits

 

15,686

 

14,617

Other current liabilities

 

15,371

 

15,659

Total current liabilities

 

72,309

 

65,199

 
Deferred income taxes

 

6,160

 

5,696

Long-term employee benefits and other

 

38,700

 

36,226

Shareholders' equity

 

381,847

 

361,259

Total liabilities and shareholders' equity

$

499,016

$

468,380

BADGER METER, INC.
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

2021

2020

2021

2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating activities:
Net earnings

$

13,972

 

$

9,534

 

$

27,753

 

$

21,388

 

Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation

 

2,990

 

 

3,003

 

 

5,863

 

 

5,978

 

Amortization

 

4,022

 

 

3,227

 

 

8,088

 

 

6,483

 

Deferred income taxes

 

7

 

 

-

 

 

45

 

 

392

 

Noncurrent employee benefits

 

79

 

 

369

 

 

160

 

 

457

 

Stock-based compensation expense

 

573

 

 

398

 

 

947

 

 

705

 

Changes in:
Receivables

 

(2,242

)

 

5,253

 

 

1,622

 

 

6,638

 

Inventories

 

(6,096

)

 

(2,367

)

 

(4,812

)

 

5,070

 

Payables

 

1,075

 

 

(631

)

 

5,366

 

 

3,886

 

Prepaid expenses and other current assets

 

(831

)

 

(991

)

 

(1,259

)

 

(1,600

)

Other liabilities

 

964

 

 

3,953

 

 

1,296

 

 

2,889

 

Total adjustments

 

541

 

 

12,214

 

 

17,316

 

 

30,898

 

Net cash provided by operations

 

14,513

 

 

21,748

 

 

45,069

 

 

52,286

 

 
Investing activities:
Property, plant and equipment expenditures

 

(2,619

)

 

(1,637

)

 

(4,378

)

 

(3,579

)

Acquisitions, net of cash acquired

 

55

 

 

-

 

 

(44,506

)

 

-

 

Net cash used for investing activities

 

(2,564

)

 

(1,637

)

 

(48,884

)

 

(3,579

)

 
Financing activities:
Dividends paid

 

(5,240

)

 

(4,940

)

 

(10,479

)

 

(9,878

)

Proceeds from exercise of stock options

 

-

 

 

-

 

 

352

 

 

478

 

Repurchase of treasury stock

 

(460

)

 

(406

)

 

(460

)

 

(2,873

)

Issuance of treasury stock

 

30

 

 

38

 

 

72

 

 

93

 

Net cash used for financing activities

 

(5,670

)

 

(5,308

)

 

(10,515

)

 

(12,180

)

Effect of foreign exchange rates on cash

 

(322

)

 

22

 

 

(584

)

 

(197

)

 
Increase (decrease) in cash and cash equivalents

 

5,957

 

 

14,825

 

 

(14,914

)

 

36,330

 

Cash and cash equivalents - beginning of period

 

51,402

 

 

70,376

 

 

72,273

 

 

48,871

 

 
Cash and cash equivalents - end of period

$

57,359

 

$

85,201

 

$

57,359

 

$

85,201

 

 

Contacts

Karen Bauer at (414) 371-7276
kbauer@badgermeter.com

Release Summary

Badger Meter Reports Second Quarter 2021 Results

Contacts

Karen Bauer at (414) 371-7276
kbauer@badgermeter.com