Badger Meter Reports Record First Quarter 2024 Financial Results

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Badger Meter Reports Record First Quarter 2024 Financial Results

April 18, 2024

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MILWAUKEE--(BUSINESS WIRE)-- Badger Meter, Inc. (NYSE: BMI) today reported record results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights

• Record total sales of $196.3 million, 23% higher than the prior year's $159.1 million.
• Operating profit increased 46% year-over-year, with operating profit margins expanding 290 basis points to a record 18.6% from 15.7%.
• Diluted earnings per share (EPS) increased 50% to $0.99, up from $0.66 in the comparable prior year quarter.
• Completed the acquisition of the Telog/Unity remote network monitoring offering at the start of the year.

"The continued strength in both customer demand and operating execution drove exceptional performance in our first quarter, with record quarterly revenue, operating profit and EPS results. These record results are reflective of ongoing favorable industry fundamentals, driving robust customer demand for our innovative smart water solutions. Our operating profit margins benefited from higher volumes, solid operating execution and selling, engineering and administration (SEA) expense leverage. Additionally, we completed the acquisition of the Telog/Unity network monitoring offering at the beginning of the year with seamless integration of their hardware and software teams well underway," said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. "I am pleased with our collective achievements to start off the year and want to thank our world-class employees for their dedication and commitment to serving our customers."

First Quarter Operating Results

Utility water sales increased 29% year-over-year reflecting continued customer adoption across our broad and expanding portfolio of smart water solutions. This encompasses our cellular AMI offering, inclusive of ORION^® Cellular endpoints and BEACON^® Software as a Service (SaaS) revenues coupled with increased water meter volumes including E-Series^® Ultrasonic meters. The growth also extends to water quality, pressure and network monitoring solutions which increased sales year-over-year.

Sales of flow instrumentation products increased sequentially yet declined 3% year-over-year against a difficult prior year comparison which benefited from backlog conversion on improved supply chain dynamics a year ago. Water-focused end markets continued to experience solid order demand.

Operating earnings increased 46% year-over-year, with operating profit margins reaching a record 18.6% in the first quarter of 2024, a 290 basis point improvement from the prior year's 15.7%. Gross margin dollars increased $14.4 million year-over-year, and gross margin as a percent of sales was 39.3%, up 10 basis points sequentially and within our normalized range. The stable gross margin range reflects the continued benefits of positive sales mix and higher volumes, despite inflationary cost pressures.

SEA expenses in the first quarter of 2024 were $40.6 million, $2.8 million higher than the comparable prior year quarter and up $1.2 million sequentially from the fourth quarter. As a percent of sales, SEA improved by 300 basis points to 20.7% versus 23.7% in the comparable prior year quarter. The year-over-year increase in SEA expenses was the result of growth investments including higher personnel-related costs such as headcount, salaries, and incentive compensation.

The tax rate for the first quarter of 2024 was 23.5%, modestly below the prior year's 24.3%. As a result of the above, combined with increased interest income, EPS was a record $0.99, up 50% compared to $0.66 in the comparable prior year period.

Outlook

Bockhorst continued, "Our first quarter results demonstrate our continued adeptness in capitalizing on the resilient macro trends within the water industry. While we face more difficult prior year comparisons as the year progresses, we have confidence in the durability of our end markets, the appeal of our innovative offerings and strength of our execution to drive sales and earnings growth.

"Our expanding suite of end-to-end smart water offerings provides our customers with the ability to customize and tailor solutions to best meet their water management needs. Our proven strategy and strong balance sheet support our ongoing capital allocation priorities including value-added, disciplined acquisitions to continue to differentiate our offerings.

"We were proud to be named for the second consecutive year to Barron's 2024 list of 100 Most Sustainable Companies. Additionally, we were named a 2024 USA Top Workplace. We believe these types of recognition demonstrate our longstanding philosophy that both managing and enabling sustainability drives long-term shareholder value and world-class employee engagement."

Bockhorst concluded, "Badger Meter remains committed to serving our customers, executing our strategy and investing for long-term profitable growth which in turn enables us 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 first quarter 2024 results today, Thursday, April 18, 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 also register to take part in the call using this online registration link: https://www.netroadshow.com/events/login?show=3351168b&confId=63073

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 March 31,
			2024		2023
			(Unaudited)		(Unaudited)
Net sales			$	196,280			$	159,101
Cost of sales				119,102				96,285
Gross margin				77,178				62,816
Selling, engineering and administration				40,600				37,770
Operating earnings				36,578				25,046
Interest income, net				(1,526	)			(622	)
Other pension and postretirement costs				12				32
Earnings before income taxes				38,092				25,636
Provision for income taxes				8,961				6,221
Net earnings			$	29,131			$	19,415
Earnings per share:
	Basic		$	0.99			$	0.66
	Diluted		$	0.99			$	0.66
Shares used in computation of earnings per share:
	Basic			29,320,483				29,255,184
	Diluted			29,494,488				29,420,954

BADGER METER, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Assets	March 31,		December 31,
		2024		2023
		(Unaudited)
Cash and cash equivalents		$	199,310		$	191,782
Receivables			92,287				83,507
Inventories			160,444				153,674
Prepaid expenses and other current assets			18,557				13,214
Total current assets			470,598				442,177
Net property, plant and equipment			72,934				73,878
Intangible assets, at cost less accumulated amortization			52,471				53,737
Other long-term assets			33,997				33,964
Goodwill			113,474				113,163
Total assets		$	743,474			$	716,919
Liabilities and Shareholders' Equity
Payables		$	90,617			$	81,807
Accrued compensation and employee benefits			15,588				29,871
Other current liabilities			28,889				20,270
Total current liabilities			135,094				131,948
Deferred income taxes			4,894				5,061
Long-term employee benefits and other			67,919				63,428
Shareholders' equity			535,567				516,482
Total liabilities and shareholders' equity		$	743,474			$	716,919

BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
		Three Months Ended March 31,
		2024		2023
		(Unaudited)		(Unaudited)
Operating activities:
Net earnings		$	29,131			$	19,415
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation			2,892				2,663
Amortization			5,118				4,284
Deferred income taxes			-				(10	)
Noncurrent employee benefits			1				(37	)
Stock-based compensation expense			1,271				1,006
Changes in:
Receivables			(9,164	)			(6,843	)
Inventories			(6,405	)			(11,439	)
Payables			7,960				6,959
Prepaid expenses and other assets			(8,065	)			(2,133	)
Other liabilities			(1,279	)			4,105
Total adjustments			(7,671	)			(1,445	)
Net cash provided by operations			21,460				17,970
Investing activities:
Property, plant and equipment expenditures			(2,676	)			(4,271	)
Acquisitions, net of cash acquired			(3,000	)			(17,052	)
Net cash used for investing activities			(5,676	)			(21,323	)
Financing activities:
Dividends paid			(7,942	)			(6,626	)
Proceeds from exercise of stock options			230				58
Net cash used for financing activities			(7,712	)			(6,568	)
Effect of foreign exchange rates on cash			(544	)			230
Increase (decrease) in cash and cash equivalents			7,528				(9,691	)
Cash and cash equivalents - beginning of period			191,782				138,052
Cash and cash equivalents - end of period		$	199,310			$	128,361

Source: Badger Meter, Inc.

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