Badger Meter Reports Third Quarter 2024 Financial Results

October 17, 2024

MILWAUKEE–(BUSINESS WIRE)–Badger Meter, Inc. (NYSE: BMI) today reported results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights

Total sales of $208.4 million, 12% higher than the prior year’s $186.2 million.
Operating profit increased 29% year-over-year, with operating profit margins expanding 260 basis points to a record 19.5%.
Diluted earnings per share (EPS) increased 23% to $1.08, up from $0.88 in the comparable prior year quarter.
Record cash flow with $45.1 million in net cash provided by operations, which increased 43% year-over-year.
Increased annual dividend rate by 26% to $1.36 per share, representing the 32^nd consecutive year of dividend growth.

“We were pleased with our third quarter financial performance delivering strong sales growth, record operating profit margins and robust cash flow generation. Sales in the quarter continued to benefit from solid demand for our tailorable water management solutions. Notably, we achieved record operating profit margins of 19.5%, the result of favorable sales mix, price/cost management, strong operating execution and continued selling, engineering and administration (SEA) expense leverage,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “I greatly appreciate the efforts of our employees across the globe in serving our customers.”

Third Quarter Operating Results

Utility water sales increased 14% year-over-year against a difficult prior year comparison reflecting continued solid adoption across the BlueEdge™ suite of solutions by utility customers. This included increased sales of meters, water quality, pressure and other sensors coupled with ORION^® communication endpoints and BEACON^® Software as a Service (SaaS).

Sales of flow instrumentation products were flat year-over-year with modest growth in the water-focused end markets generally offsetting declines across the array of de-emphasized applications, globally.

Operating earnings increased 29% year-over-year, with operating profit margins reaching a record 19.5% in the third quarter of 2024, a 260-basis point improvement from the prior year’s 16.9%. Gross margin dollars increased 15% year-over-year, and gross margin as a percent of sales was 40.2%, an increase of 110 basis points over the comparable prior year period. The gross margin improvement reflects the continued benefits of positive structural sales mix, including strong AMI and software-related sales, as well as ongoing price/cost benefit and solid operating execution.

SEA expenses in the third quarter of 2024 were $43.3 million, $2.0 million higher than the comparable prior year quarter with higher headcount and personnel-related costs. SEA as a percent of sales improved 140 basis points to 20.8% from 22.2% in the comparable prior year quarter as a result of the strong sales.

The tax rate for the third quarter of 2024 was 25.3% compared to 20.3% in the prior year comparable period which included a discrete favorable income tax benefit related to equity compensation transactions. As a result of the above, combined with increased interest income year-over-year, EPS was $1.08, an increase of 23% compared to $0.88 in the comparable prior year period.

Outlook

Bockhorst continued, “As we prepare to close out the year, we remain focused on capitalizing on the durable macro trends benefiting the water industry. By leveraging BlueEdge – our suite of tailorable end-to-end smart water offerings – our expanding customer base is realizing the efficiency, resiliency and sustainability benefits required to best meet their unique water resource management needs.

“Taking into account our normalizing backlog, strong bid funnel and constructive order rates, we anticipate delivering high single-digit sales growth rates over the cycle, noting the prevailing unevenness common in the industry. We continue to strive for modest operating profit margin expansion year-over-year, driven by favorable structural sales mix, value-based price/cost management and SEA leverage.

“Specific to the fourth quarter, similar to prior years we expect sequentially fewer total operating days given the holiday-shortened activity levels at our customers. Additionally, evolving hurricane recovery activities have the potential to delay Southeast U.S. utility projects in the near term.

“Finally, we anticipate continued robust cash flow, with ample cash and credit availability, giving us the financial flexibility to execute our capital allocation priorities as reflected in the recent 26% annual dividend increase.”

Bockhorst concluded, “Our ongoing success is built on our steadfast culture of continuous improvement, enabling our team to execute for customers and drive outperformance for Badger Meter. I remain excited about our ability to deliver shareholder value while we 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 third quarter 2024 results today, Thursday October 17, 2024 at 10:00 AM Central / 11:00 AM Eastern time. The listen-only webcast and related presentation can be accessed via the Investor section of our website. Participants can register to take part in the call using this online registration link: https://www.netroadshow.com/events/login?show=e2388dc6&confId=71869

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 September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Net sales	$	208,438		$	186,193		$	621,376		$	521,152

Cost of sales		124,560			113,470			374,952			316,179

Gross margin		83,878			72,723			246,424			204,973

Selling, engineering and administration		43,255			41,301			127,711			119,003

Operating earnings		40,623			31,422			118,713			85,970

Interest income, net		(2,301	)		(1,200	)		(5,689	)		(2,649	)
Other pension and postretirement costs		13			32			37			97

Earnings before income taxes		42,911			32,590			124,365			88,522

Provision for income taxes		10,873			6,621			30,140			20,645

Net earnings	$	32,038		$	25,969		$	94,225		$	67,877

Earnings per share:

Basic	$	1.09		$	0.89		$	3.21		$	2.32

Diluted	$	1.08		$	0.88		$	3.19		$	2.30

Shares used in computation of earnings per share:

Basic		29,369,923			29,294,886			29,351,688			29,275,445

Diluted		29,547,928			29,473,374			29,524,993			29,448,475

BADGER METER, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)


Assets	September 30,		December 31,
	2024		2023
	(Unaudited)

Cash and cash equivalents	$	258,955	$	191,782
Receivables		93,427		83,507
Inventories		158,517		153,674
Other current assets		18,397		13,214
Total current assets		529,296		442,177

Net property, plant and equipment		73,279		73,878
Intangible assets, at cost less accumulated amortization		48,957		53,737
Other long-term assets		36,328		33,964
Goodwill		115,001		113,163
Total assets	$	802,861	$	716,919


Liabilities and Shareholders’ Equity

Payables	$	77,381	$	81,807
Accrued compensation and employee benefits		29,756		29,871
Other current liabilities		22,026		20,270
Total current liabilities		129,163		131,948

Deferred income taxes		5,108		5,061
Long-term employee benefits and other		77,405		63,428
Shareholders’ equity		591,185		516,482
Total liabilities and shareholders’ equity	$	802,861	$	716,919

BADGER METER, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Operating activities:
Net earnings	$	32,038		$	25,969		$	94,225		$	67,877

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

Depreciation		2,589			2,662			8,330			8,100
Amortization		5,427			4,404			15,787			12,820
Deferred income taxes		–			(25	)		–			(401	)
Noncurrent employee benefits		9			(52	)		(12	)		(274	)
Stock-based compensation expense		1,314			1,356			4,595			3,963
Changes in:
Receivables		13,403			(5,352	)		(9,814	)		(11,855	)
Inventories		3,889			(3,875	)		(3,367	)		(27,628	)
Payables		(18,581	)		4,178			(5,242	)		12,282
Prepaid expenses and other assets		717			(2,299	)		(7,772	)		(7,279	)
Other liabilities		4,283			4,467			6,237			14,567
Total adjustments		13,050			5,464			8,742			4,295
Net cash provided by operations		45,088			31,433			102,967			72,172

Investing activities:
Property, plant and equipment expenditures		(3,132	)		(3,014	)		(8,149	)		(9,949	)
Acquisitions, net of cash acquired		–			–			(3,000	)		(17,127	)
Net cash used for investing activities		(3,132	)		(3,014	)		(11,149	)		(27,076	)

Financing activities:
Dividends paid		(9,986	)		(7,917	)		(25,862	)		(21,134	)
Proceeds from exercise of stock options		–			909			751			967
Net cash used for financing activities		(9,986	)		(7,008	)		(25,111	)		(20,167	)
Effect of foreign exchange rates on cash		773			(306	)		466			(71	)

Increase in cash and cash equivalents		32,743			21,105			67,173			24,858
Cash and cash equivalents – beginning of period		226,212			141,805			191,782			138,052

Cash and cash equivalents – end of period	$	258,955		$	162,910		$	258,955		$	162,910