Badger Meter Reports Fourth Quarter and Full Year 2023 Financial Results
- Total sales increased by 24% for the fourth quarter and full year of 2023.
- Operating profit margins expanded by 230 basis points to 17.6% in the fourth quarter.
- Diluted EPS increased by 40% in the fourth quarter, and by 39% for the full year.
- Record cash flow with $37.9 million in net cash provided by operations for the fourth quarter, and $110.1 million for the full year.
- Utility water sales increased by 28% year-over-year.
- The company completed a tuck-in acquisition of select remote water monitoring assets.
- None.
Insights
The reported financial results from Badger Meter, Inc. reflect a significant uptick in performance, with a 24% increase in total sales and a 40% rise in diluted EPS for the fourth quarter of 2023. This robust growth is indicative of strong market demand and operational efficiency, which are critical factors for investors assessing the company's market position and future growth prospects.
From a market research perspective, the sales growth in utility water and the adoption rates for digital smart water solutions suggest a successful strategy in capitalizing on the trend towards smart city infrastructure and IoT integration in utilities management. The expansion of operating profit margins by 230 basis points to a record 17.6% is particularly noteworthy, as it implies operational leverage and effective cost management, even as the company scales up its operations.
The acquisition of remote water monitoring assets post-year-end aligns with the strategic objective to broaden the smart water offerings, which could provide additional revenue streams and strengthen the company's competitive position in the smart utilities market.
Badger Meter's financial performance, with record cash flow and a significant increase in EPS, paints a positive picture for the company's financial health and its ability to generate shareholder value. An increase in net cash provided by operations to $110.1 million for the full year signals strong operational cash flow, which is a key indicator of a company's ability to self-finance growth initiatives and return capital to shareholders.
However, it is important to note the increase in selling, engineering and administrative expenses, which rose by $4.9 million year-over-year. While this is offset by the overall sales growth, it is a reminder that the company must continue to manage these costs effectively to maintain profitability.
The increase in the tax rate from 23.4% to 26.1% could also be a point of consideration, as it impacts net income and ultimately, earnings per share. Investors would do well to monitor how tax rates and fiscal policy might affect the company's future earnings.
Badger Meter's performance can be seen as a microcosm of the broader economic trends in the water management and infrastructure sector. The company's growth in sales and operating profit margins may reflect increased investments in water infrastructure, which is often seen as a leading indicator of public and private sector confidence in economic growth.
The company's strategic investments in innovation and acquisitions suggest a positive outlook on the economy, as they indicate a willingness to invest in future growth despite potential economic uncertainties. The resilient order pace and robust bid funnel mentioned by the CEO further support the notion of a healthy economic environment for the water management industry.
Moreover, the focus on efficiency, resiliency and sustainability aligns with global economic shifts towards environmentally sustainable practices, indicating that Badger Meter is positioning itself to be relevant and competitive in a future economy that values sustainability.
Fourth Quarter 2023 Highlights
-
Total sales of
$182.4 million 24% higher than the prior year’s$147.3 million -
Operating profit increased
43% year-over-year, with operating profit margins expanding 230 basis points to17.6% from15.3% . -
Diluted earnings per share (EPS) increased
40% to$0.84 $0.60 -
Record cash flow with
$37.9 million 28% over the prior year.
Full Year 2023 Highlights
-
Record total sales of
$703.6 million 24% higher than the prior year’s$565.6 million -
Software sales exceeded
$42 million 27% year-over-year. -
Operating profit margins improved 140 basis points over the prior year to
16.8% . -
Diluted EPS increased
39% to a record$3.14 $2.26 -
Record cash flow with
$110.1 million
Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer, stated, “Our strong fourth quarter results capped off a stellar 2023 with continuing robust demand and operational execution. We delivered
Fourth Quarter Operating Results
Utility water sales increased
Sales of flow instrumentation products were up slightly year-over-year, the result of steady order demand across the water-focused end markets including wastewater and HVAC, which offset anticipated modest sales declines in the de-emphasized general industrial markets.
Operating earnings increased an exceptional
Selling, engineering and administrative (SEA) expenses in the fourth quarter of 2023 were
The tax rate for the fourth quarter of 2023 was
Full Year Recap and Outlook
Bockhorst continued, “In 2023, Badger Meter continued to build on our track record of differentiated performance, delivering
“For 2024 and beyond, we remain committed to the formula that has driven our success - focusing on our customers, offering innovative and differentiated technologies, and driving operational excellence. This proven blueprint, coupled with our resilient order pace, robust bid funnel and backlog, give us confidence in our ability to grow sales and earnings year-over-year.”
Bockhorst concluded, “We believe we are well-positioned with the right strategies, ample capital and an exceptional team to continue to drive strong shareholder returns while protecting the world’s most precious resource.”
Conference Call and Webcast Information
Badger Meter management will hold a conference call to discuss the Company’s fourth quarter and full year 2023 results today, Friday January 26, 2024 at 10:00 AM Central/11:00 AM Eastern time. The webcast and related presentation can be accessed via the Investor section of the Company’s website. Individuals wishing to participate in the call should use this online registration link: https://www.netroadshow.com/events/login?show=aac253b1&confId=59366
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 December 31, |
|
Twelve Months Ended December 31, |
|||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|||||||||
| Net sales | $ |
182,440 |
|
$ |
147,324 |
|
$ |
703,592 |
|
$ |
565,568 |
|
|||
| Cost of sales |
|
110,975 |
|
|
90,359 |
|
|
427,154 |
|
|
345,598 |
|
|||
| Gross margin |
|
71,465 |
|
|
56,965 |
|
|
276,438 |
|
|
219,970 |
|
|||
| Selling, engineering and administration |
|
39,386 |
|
|
34,491 |
|
|
158,389 |
|
|
132,675 |
|
|||
| Operating earnings |
|
32,079 |
|
|
22,474 |
|
|
118,049 |
|
|
87,295 |
|
|||
| Interest income, net |
|
(1,398 |
) |
|
(465 |
) |
|
(4,047 |
) |
|
(552 |
) |
|||
| Other pension and postretirement costs |
|
33 |
|
|
33 |
|
|
130 |
|
|
130 |
|
|||
| Earnings before income taxes |
|
33,444 |
|
|
22,906 |
|
|
121,966 |
|
|
87,717 |
|
|||
| Provision for income taxes |
|
8,723 |
|
|
5,367 |
|
|
29,368 |
|
|
21,221 |
|
|||
| Net earnings | $ |
24,721 |
|
$ |
17,539 |
|
$ |
92,598 |
|
$ |
66,496 |
|
|||
| Earnings per share: | |||||||||||||||
| Basic | $ |
0.84 |
|
$ |
0.60 |
|
$ |
3.16 |
|
$ |
2.28 |
|
|||
| Diluted | $ |
0.84 |
|
$ |
0.60 |
|
$ |
3.14 |
|
$ |
2.26 |
|
|||
| Shares used in computation of earnings per share: | |||||||||||||||
| Basic |
|
29,305,864 |
|
|
29,230,963 |
|
|
29,284,396 |
|
|
29,218,486 |
|
|||
| Diluted |
|
29,471,418 |
|
|
29,406,499 |
|
|
29,455,557 |
|
|
29,376,077 |
|
|||
| BADGER METER, INC. | ||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||
| (in thousands) | ||||||
Assets |
December 31, |
|
December 31, |
|||
|
2023 |
|
|
2022 |
||
| (Unaudited) | ||||||
| Cash and cash equivalents | $ |
191,782 |
$ |
138,052 |
||
| Receivables |
|
83,507 |
|
76,651 |
||
| Inventories |
|
153,674 |
|
119,856 |
||
| Other current assets |
|
13,214 |
|
13,273 |
||
| Total current assets |
|
442,177 |
|
347,832 |
||
| Net property, plant and equipment |
|
73,878 |
|
73,542 |
||
| Intangible assets, at cost less accumulated amortization |
|
53,737 |
|
53,607 |
||
| Other long-term assets |
|
33,964 |
|
26,805 |
||
| Goodwill |
|
113,163 |
|
101,261 |
||
| Total assets | $ |
716,919 |
$ |
603,047 |
||
Liabilities and Shareholders' Equity |
||||||
| Payables | $ |
81,807 |
$ |
71,440 |
||
| Accrued compensation and employee benefits |
|
29,871 |
|
20,513 |
||
| Other current liabilities |
|
20,270 |
|
18,359 |
||
| Total current liabilities |
|
131,948 |
|
110,312 |
||
| Deferred income taxes |
|
5,061 |
|
4,648 |
||
| Long-term employee benefits and other |
|
63,428 |
|
45,665 |
||
| Shareholders' equity |
|
516,482 |
|
442,422 |
||
| Total liabilities and shareholders' equity | $ |
716,919 |
$ |
603,047 |
||
| BADGER METER, INC. | |||||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | |||||||||||||||||
| (in thousands) | |||||||||||||||||
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|||||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|||
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|||||||||||
| Operating activities: | |||||||||||||||||
| Net earnings | $ |
24,721 |
|
$ |
17,539 |
|
$ |
92,598 |
|
$ |
66,496 |
|
|||||
| Adjustments to reconcile net earnings to net cash provided by operations: | |||||||||||||||||
| Depreciation |
|
2,837 |
|
|
2,677 |
|
|
10,937 |
|
|
11,090 |
|
|||||
| Amortization |
|
4,353 |
|
|
3,403 |
|
|
17,173 |
|
|
15,151 |
|
|||||
| Deferred income taxes |
|
(9,249 |
) |
|
(5,643 |
) |
|
(9,650 |
) |
|
(5,619 |
) |
|||||
| Noncurrent employee benefits |
|
(64 |
) |
|
(510 |
) |
|
(338 |
) |
|
(648 |
) |
|||||
| Stock-based compensation expense |
|
1,225 |
|
|
978 |
|
|
5,188 |
|
|
3,148 |
|
|||||
| Changes in: | |||||||||||||||||
| Receivables |
|
5,504 |
|
|
7,532 |
|
|
(6,351 |
) |
|
(11,328 |
) |
|||||
| Inventories |
|
(4,839 |
) |
|
(4,814 |
) |
|
(32,467 |
) |
|
(21,021 |
) |
|||||
| Payables |
|
(3,776 |
) |
|
4,137 |
|
|
8,506 |
|
|
28,007 |
|
|||||
| Prepaid expenses and other assets |
|
267 |
|
|
(1,152 |
) |
|
(7,012 |
) |
|
(10,557 |
) |
|||||
| Other liabilities |
|
16,966 |
|
|
5,561 |
|
|
31,533 |
|
|
7,732 |
|
|||||
| Total adjustments |
|
13,224 |
|
|
12,169 |
|
|
17,519 |
|
|
15,955 |
|
|||||
| Net cash provided by operations |
|
37,945 |
|
|
29,708 |
|
|
110,117 |
|
|
82,451 |
|
|||||
| Investing activities: | |||||||||||||||||
| Property, plant and equipment expenditures |
|
(2,054 |
) |
|
(1,201 |
) |
|
(12,003 |
) |
|
(5,891 |
) |
|||||
| Acquisitions, net of cash acquired |
|
- |
|
|
- |
|
|
(17,127 |
) |
|
- |
|
|||||
| Net cash used for investing activities |
|
(2,054 |
) |
|
(1,201 |
) |
|
(29,130 |
) |
|
(5,891 |
) |
|||||
| Financing activities: | |||||||||||||||||
| Dividends paid |
|
(7,918 |
) |
|
(6,589 |
) |
|
(29,052 |
) |
|
(24,881 |
) |
|||||
| Proceeds from exercise of stock options |
|
- |
|
|
642 |
|
|
967 |
|
|
703 |
|
|||||
| Repurchase of treasury stock |
|
- |
|
|
- |
|
|
- |
|
|
(427 |
) |
|||||
| Net cash used for financing activities |
|
(7,918 |
) |
|
(5,947 |
) |
|
(28,085 |
) |
|
(24,605 |
) |
|||||
| Effect of foreign exchange rates on cash |
|
899 |
|
|
705 |
|
|
828 |
|
|
(1,077 |
) |
|||||
| Increase in cash and cash equivalents |
|
28,872 |
|
|
23,265 |
|
|
53,730 |
|
|
50,878 |
|
|||||
| Cash and cash equivalents - beginning of period |
|
162,910 |
|
|
114,787 |
|
|
138,052 |
|
|
87,174 |
|
|||||
| Cash and cash equivalents - end of period | $ |
191,782 |
|
$ |
138,052 |
|
$ |
191,782 |
|
$ |
138,052 |
|
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240126718507/en/
Karen Bauer
(414) 371-7276
kbauer@badgermeter.com
Source: Badger Meter, Inc.
FAQ
What were Badger Meter, Inc.'s total sales for the fourth quarter of 2023?
What was the percentage increase in diluted EPS for the full year of 2023?
What was the net cash provided by operations for the full year of 2023?
Did Badger Meter, Inc. complete any strategic acquisition in 2023?
What was the year-over-year increase in utility water sales?
