Badger Meter Reports Fourth Quarter and Full Year 2023 Financial Results
Badger Meter, Inc. reported a strong financial performance for the fourth quarter and full year of 2023, with total sales increasing by 24% and operating profit margins expanding. Diluted EPS increased by 40% in the fourth quarter, and a record $3.14 for the full year. The company also achieved record cash flow, and completed a strategic acquisition to expand its smart water offerings. Utility water sales increased by 28% year-over-year, and the company expressed confidence in its ability to drive strong shareholder returns in the future.
Positive
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.
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.
01/26/2024 - 08:30 AM
MILWAUKEE --(BUSINESS WIRE)--
Badger Meter, Inc. (NYSE: BMI) today reported results for the fourth quarter and full year ended December 31, 2023.
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 to 17.6% from 15.3% .
Diluted earnings per share (EPS) increased 40% to $0.84 , up from $0.60 in the comparable prior year quarter.
Record cash flow with $37.9 million in net cash provided by operations, increasing 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 , increasing 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 , up from $2.26 in the prior year.
Record cash flow with $110.1 million in net cash provided by operations.
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 24% sales growth in the fourth quarter with record operating profit margins of 17.6% and record cash flow. Shortly after year-end, we completed the tuck-in acquisition of select remote water monitoring assets, expanding the breadth of our smart water offerings in line with our strategic objectives. I want to thank the Badger Meter team for delivering another year of exceptional performance driven by their unrelenting commitment to our customers.”
Fourth Quarter Operating Results
Utility water sales increased 28% year-over-year with strong growth across the broad suite of digital smart water solutions. This includes robust adoption rates for our cellular AMI offering, including higher ORION® Cellular endpoint and BEACON® Software as a Service (SaaS) revenues, as well as increased E-Series® Ultrasonic meters sales. Higher water quality and pressure monitoring sales also contributed to the year-over-year sales increase.
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 43% year-over-year, with operating profit margins expanding 230 basis points to a record 17.6% in the fourth quarter of 2023, up from the prior year’s 15.3% . Gross margin dollars increased $14.5 million year-over-year, and gross margin as a percent of sales was 39.2% , an increase of 50 basis points over the comparable prior year quarter. Gross margins continue to benefit from higher volumes and structural positive sales mix trends.
Selling, engineering and administrative (SEA) expenses in the fourth quarter of 2023 were $39.4 million , with SEA as a percent of sales improving 180 basis points to 21.6% versus 23.4% in the comparable prior year quarter. The $4.9 million year-over-year increase in SEA spend included higher personnel-related costs such as headcount, salaries, and management incentives as well as the addition of Syrinix, including the associated intangible asset amortization.
The tax rate for the fourth quarter of 2023 was 26.1% compared to 23.4% in the prior year comparable quarter. EPS was a record $0.84 , up 40% compared to $0.60 in the comparable prior year period.
Full Year Recap and Outlook
Bockhorst continued, “In 2023, Badger Meter continued to build on our track record of differentiated performance, delivering 24% year-over-year sales growth, record operating profit margins and a 39% increase in EPS. Our strategic actions, including continued investments in hardware and software innovation, incremental manufacturing capacity and tuck-in acquisitions have enabled us to further capitalize on the robust demand for our comprehensive and tailorable digital water management offerings. These customized solutions deliver efficiency, resiliency, and sustainability for customers to address the variety of persistent challenges facing the water industry.
“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.
What were Badger Meter, Inc.'s total sales for the fourth quarter of 2023?
Badger Meter, Inc.'s total sales for the fourth quarter of 2023 were $182.4 million.
What was the percentage increase in diluted EPS for the full year of 2023?
The percentage increase in diluted EPS for the full year of 2023 was 39%.
What was the net cash provided by operations for the full year of 2023?
The net cash provided by operations for the full year of 2023 was $110.1 million.
Did Badger Meter, Inc. complete any strategic acquisition in 2023?
Yes, Badger Meter, Inc. completed the tuck-in acquisition of select remote water monitoring assets.
What was the year-over-year increase in utility water sales?
The year-over-year increase in utility water sales was 28%.