Badger Meter Reports Third Quarter 2024 Financial Results

Rhea-AI Summary

Badger Meter (NYSE: BMI) reported strong third quarter 2024 financial results. Highlights include:

• Total sales of $208.4 million, up 12% year-over-year
• Operating profit increased 29%, with margins expanding 260 basis points to a record 19.5%
• Diluted EPS rose 23% to $1.08
• Record cash flow with $45.1 million in net cash from operations, up 43% year-over-year
• Annual dividend rate increased by 26% to $1.36 per share

The company saw continued solid demand for its water management solutions, with utility water sales up 14% year-over-year. Flow instrumentation product sales remained flat. Badger Meter anticipates delivering high single-digit sales growth rates over the cycle and expects modest operating profit margin expansion year-over-year.

Positive

• Total sales increased 12% year-over-year to $208.4 million
• Operating profit margins expanded 260 basis points to a record 19.5%
• Diluted EPS increased 23% to $1.08
• Net cash from operations increased 43% to $45.1 million
• Annual dividend rate increased by 26% to $1.36 per share
• Utility water sales increased 14% year-over-year
• Gross margin as a percent of sales increased 110 basis points to 40.2%
• SEA as a percent of sales improved 140 basis points to 20.8%

Negative

• Flow instrumentation product sales were flat year-over-year
• Tax rate increased to 25.3% from 20.3% in the prior year quarter
• Potential delay in Southeast U.S. utility projects due to hurricane recovery activities

Insights

Financial Analyst

Badger Meter's Q3 2024 results demonstrate strong financial performance across key metrics. Total sales grew 12% year-over-year to $208.4 million, driven by a 14% increase in utility water sales. The company achieved record operating profit margins of 19.5%, expanding 260 basis points from the previous year. This margin improvement stems from favorable sales mix, effective price/cost management and improved operating efficiency.

Notably, diluted EPS increased 23% to $1.08, reflecting robust bottom-line growth. Cash flow generation was particularly strong, with net cash from operations up 43% to $45.1 million. The company's 26% dividend increase to $1.36 per share annually marks its 32nd consecutive year of dividend growth, underscoring its financial strength and commitment to shareholder returns.

Looking ahead, management expects high single-digit sales growth rates over the cycle, with potential for modest operating profit margin expansion. However, investors should note potential near-term headwinds, including fewer operating days in Q4 and possible project delays in the Southeast U.S. due to hurricane recovery efforts.

Water Industry Specialist

Badger Meter's Q3 results highlight the growing adoption of smart water management solutions in the utility sector. The 14% increase in utility water sales, despite a tough year-over-year comparison, indicates strong market demand for the company's BlueEdge™ suite of solutions. This includes increased sales of meters, water quality sensors, pressure sensors, ORION® communication endpoints and BEACON® Software as a Service (SaaS).

The company's focus on tailorable end-to-end smart water offerings is well-aligned with industry trends towards efficiency, resiliency and sustainability in water resource management. The flat performance in flow instrumentation products, with growth in water-focused end markets offsetting declines in de-emphasized applications, suggests a strategic shift towards core water management solutions.

Badger Meter's ability to capitalize on durable macro trends in the water industry positions it well for future growth. However, the potential for project delays due to hurricane recovery activities in the Southeast U.S. highlights the ongoing challenges and unpredictability in the sector.

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241017151333/en/

Karen Bauer

(414) 371-7276

kbauer@badgermeter.com

Source: Badger Meter, Inc.

FAQ

What were Badger Meter's (BMI) key financial results for Q3 2024?

Badger Meter reported total sales of $208.4 million (up 12% YoY), operating profit margins of 19.5% (up 260 bps), and diluted EPS of $1.08 (up 23% YoY) for Q3 2024.

How much did Badger Meter (BMI) increase its dividend in Q3 2024?

Badger Meter increased its annual dividend rate by 26% to $1.36 per share, marking the 32nd consecutive year of dividend growth.

What was Badger Meter's (BMI) cash flow performance in Q3 2024?

Badger Meter reported record cash flow with $45.1 million in net cash provided by operations, which increased 43% year-over-year.

How did Badger Meter's (BMI) utility water sales perform in Q3 2024?

Utility water sales increased 14% year-over-year, reflecting continued solid adoption of the BlueEdge™ suite of solutions by utility customers.

What is Badger Meter's (BMI) sales growth outlook for the future?

Badger Meter anticipates delivering high single-digit sales growth rates over the cycle, based on their normalizing backlog, strong bid funnel, and constructive order rates.