Badger Meter Reports Fourth Quarter and Full Year 2021 Results; Sales Surpass $500 Million Milestone

Rhea-AI Summary

Badger Meter reported record fourth-quarter sales of $135.7 million, up 21% from the previous year, with diluted EPS rising 31% to $0.59. For the full year, sales reached $505.2 million, a 19% increase. Operating margins improved 170 basis points in Q4 and 30 basis points for the year despite supply chain challenges. Cash generated by operations totaled $27.1 million in Q4 and $87.5 million for the year. Strong demand for innovative water solutions, alongside a record backlog, positions the company favorably for future growth.

Positive

• Record quarterly sales of $135.7 million, a 21% increase year-over-year.
• Full-year sales reached $505.2 million, up 19% compared to 2020.
• Diluted EPS increased 31% in Q4 to $0.59 and 23% for the year to $2.08.
• Operating profit margins improved by 170 basis points in Q4 and 30 basis points for the year.
• Strong cash flow with $27.1 million cash from operations in Q4 and $87.5 million for the full year.

Negative

• Ongoing supply chain disruptions affecting production output.
• Increased selling, engineering, and administration expenses due to acquisitions and pandemic-related costs.

MILWAUKEE--(BUSINESS WIRE)-- Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter and full year ended December 31, 2021.

Fourth Quarter 2021 Highlights

• Record total sales of $135.7 million, an increase of 21% compared to $112.3 million in the comparable prior year quarter.
• Strong incremental profitability with a 170 basis point increase in operating profit margins.
• Diluted earnings per share (EPS) were $0.59, a 31% increase compared to $0.45 in the comparable prior year period.
• Robust $27.1 million of cash provided by operations.
• Strong order momentum continued, exited quarter with a record backlog.

Full Year 2021 Highlights

• Full year 2021 record sales of $505.2 million, 19% higher than $425.5 million in 2020.
• Operating profit margins increased year-over-year by 30 basis points despite widespread supply chain and inflation dynamics.
• EPS increased 23% to $2.08 compared to $1.69 in the comparable prior year period.
• $87.5 million of cash provided by operations.

“The fourth quarter was an excellent finish to an outstanding year, where we achieved record financial results and surpassed $500 million in annual revenues,” said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer. “These results reflect the combination of strong demand and order momentum for our innovative smart water solutions, successful water quality acquisition integration activities, relentless execution in the face of acute supply-chain challenges and a world-class team committed to serving customers. We faced many challenges in 2021 and I am extremely proud of how our worldwide team rose to the occasion time and again.”

Fourth Quarter Operating Results

Utility water sales increased a robust 23.4% year-over-year, the result of strong order activity, backlog conversion and water quality acquisition-related sales. Excluding the year-over-year sales benefit from acquisitions of approximately $9 million, core utility water sales increased 14.4% over the prior year comparable quarter and established a new quarterly record. The growth was due to higher ORION^® Cellular endpoint sales as well as increased BEACON^® SaaS revenue. Backlog grew as continued strong order momentum more than offset recovering production output, as intermittent supply chain limitations continued to impact full conversion of utility water orders to net sales.

Sales of flow instrumentation products grew 8.9% year-over-year as improved demand and easier comparisons across the varied end markets was partially offset by the impact of supply chain disruptions that limited manufacturing output.

Gross margin increased $10.8 million year-over-year, with gross margin as a percent of sales of 40.4%, an increase of 120 basis points over the prior year comparable quarter. The Company executed well on pricing realization and manufacturing output optimization in the face of prevalent inflationary pressures and production volatility caused by restricted component availability. Gross margins benefitted from favorable product and acquisition mix, including higher SaaS revenues. The prior year included a non-recurring discrete network sunset provision benefitting the year-over-year comparison.

Selling, engineering and administration (“SEA”) expenses in the fourth quarter of 2021 were $32.0 million, or 23.6% as a percent of sales, compared to $27.1 million, and 24.1% in the comparable prior year quarter. The year-over-year increase in expenses is primarily the result of the addition of the water quality acquisitions, including the related intangible asset amortization as well as higher compensation expenses. Additionally, certain pandemic-impacted expenses such as travel, returned to more normalized levels.

As a result of the above, operating margin was 16.8%, a 170 basis point increase from the prior year’s 15.1%. The tax rate of 24.5% was higher than the prior year’s 22.6%.

Full Year Recap and Outlook

Bockhorst continued, “We achieved record sales and earnings in fiscal 2021, and I am proud of the way Badger Meter employees came together to generate these strong results while navigating supply chain complexities, inflation and continued challenges from the pandemic. We capitalized on strong customer demand trends for our leading water instrumentation and software offerings. Through disciplined execution, we were are able to differentiate our performance, enhance our competitive position, and deliver for our customers.”

”Badger Meter ended 2021 with strong demand for our smart water solutions, and we are well positioned to continue to capitalize on the opportunities in front of us. Our record backlog and order momentum continue to benefit from positive industry fundamentals, including customer requirements to enhance operational efficiency, security and awareness. Leveraging our industry-leading ORION Cellular endpoints and our BEACON digital platform, Badger Meter is transforming our engagement with customers, enabling their ability to address water-related challenges. We remain focused on growth by leveraging innovative technologies, driving higher recurring software revenues and investing in developing robust digital solutions across the water eco-system.”

“Looking ahead, sporadic supply chain disruptions and inflation headwinds are expected to continue in the near term. Our teams have demonstrated nimbleness in the face of these challenges in the past, and by sustaining this execution momentum, we expect to continue to deliver strong financial results.”

Bockhorst concluded, “I want to thank our employees for putting us in an admirable position for continued success as we start the new year. We have an excellent balance sheet, enabling us to execute our growth strategies including enhancing our digital solutions portfolio, and expanding our employee talent base to address the attractive long-term growth opportunities in our market. We remain excited about the road ahead as we work 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 2021 results today, Friday January 28, 2022 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: https://events.q4inc.com/attendee/473741639. 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 duration, severity and geographic spread of the COVID-19 pandemic, government actions to address or mitigate the impact of the COVID-19 pandemic, and the potential 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 December 31,						Twelve Months Ended December 31,
						2021			2020			2021			2020
					(Unaudited)						(Unaudited)
Net sales					$	135,748		$	112,329		$	505,198		$	425,544
Cost of sales						80,913			68,274			299,714			257,295
Gross margin						54,835			44,055			205,484			168,249
Selling, engineering and administration						31,975			27,093			126,761			103,093
Operating earnings						22,860			16,962			78,723			65,156
Interest (income) expense, net						(49)			12			(20)			30
Other pension and postretirement costs						30			36			120			145
Earnings before income taxes						22,879			16,914			78,623			64,981
Provision for income taxes						5,603			3,820			17,739			15,638
Net earnings					$	17,276		$	13,094		$	60,884		$	49,343
Earnings per share:
	Basic				$	0.59		$	0.45		$	2.09		$	1.70
	Diluted				$	0.59		$	0.45		$	2.08		$	1.69
Shares used in computation of earnings per share:
	Basic					29,194,121			29,057,249			29,144,160			29,052,301
	Diluted					29,367,693			29,257,929			29,337,586			29,229,868

BADGER METER, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Assets		December 31,			December 31,
		2021			2020
		(Unaudited)
Cash and cash equivalents		$	87,174		$	72,273
Receivables			65,866			61,689
Inventories			99,611			81,586
Other current assets			8,709			8,140
Total current assets			261,360			223,688
Net property, plant and equipment			78,050			82,705
Intangible assets, at cost less accumulated amortization			64,176			53,598
Other long-term assets			22,919			22,518
Goodwill			104,313			88,708
Total assets		$	530,818		$	471,217
Liabilities and Shareholders' Equity
Payables		$	41,859		$	34,923
Accrued compensation and employee benefits			20,644			14,617
Other current liabilities			19,643			18,496
Total current liabilities			82,146			68,036
Deferred income taxes			5,385			5,696
Long-term employee benefits and other			40,217			36,226
Shareholders' equity			403,070			361,259
Total liabilities and shareholders' equity		$	530,818		$	471,217

BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended December 31,						Twelve Months Ended December 31,
	2021			2020			2021			2020
	(Unaudited)						(Unaudited)
Operating activities:
Net earnings	$	17,276		$	13,094		$	60,884		$	49,343
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation		2,672			3,121			11,291			12,253
Amortization		4,213			3,160			16,571			12,963
Deferred income taxes		(3,066)			(3,483)			(3,025)			(3,082)
Noncurrent employee benefits		(466)			(365)			(234)			206
Stock-based compensation expense		793			374			2,330			1,415
Changes in:
Receivables		7,745			(148)			(1,240)			3,036
Inventories		(7,948)			(59)			(13,633)			5,129
Payables		(415)			(6,876)			7,005			(391)
Prepaid expenses and other current assets		3,367			(1,347)			(8,281)			(3,522)
Other current liabilities		2,906			8,429			15,842			12,228
Total adjustments		9,801			2,806			26,626			40,235
Net cash provided by operations		27,077			15,900			87,510			89,578
Investing activities:
Property, plant and equipment expenditures		(903)			(3,204)			(6,746)			(9,059)
Proceeds from company owned life insurance plans		-			-			596			-
Acquisitions, net of cash acquired		-			(29,134)			(45,273)			(29,134)
Net cash used for investing activities		(903)			(32,338)			(51,423)			(38,193)
Financing activities:
Net decrease short-term debt		-			-			-			(4,600)
Payment of contingent acquisition consideration		-			(1,001)			-			(1,001)
Dividends paid		(5,839)			(5,232)			(22,155)			(20,340)
Proceeds from exercise of stock options		-			553			2,036			1,058
Repurchase of treasury stock		-			(182)			(460)			(3,116)
Issuance of treasury stock		-			54			72			180
Net cash used for financing activities		(5,839)			(5,808)			(20,507)			(27,819)
Effect of foreign exchange rates on cash		(199)			618			(679)			(164)
Increase (decrease) in cash and cash equivalents		20,136			(21,628)			14,901			23,402
Cash and cash equivalents - beginning of period		67,038			93,901			72,273			48,871
Cash and cash equivalents - end of period	$	87,174		$	72,273		$	87,174		$	72,273

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220128005014/en/

Karen Bauer

(414) 371-7276

kbauer@badgermeter.com

Source: Badger Meter, Inc.

FAQ

What were Badger Meter's fourth-quarter 2021 sales figures?

Badger Meter reported record fourth-quarter sales of $135.7 million.

How much did Badger Meter's earnings per share increase in Q4 2021?

Earnings per share increased by 31% to $0.59 in Q4 2021.

What was the total sales for Badger Meter in 2021?

Total sales for Badger Meter in 2021 were $505.2 million, a 19% increase from 2020.

How did operating profit margins change for Badger Meter in 2021?

Operating profit margins increased by 30 basis points for the full year 2021.

What challenges did Badger Meter face in 2021?

Badger Meter faced supply chain disruptions and rising expenses related to acquisitions and inflation.