BADGER METER INC

Previous wording

The Company's net sales for the six months ended June 30, 2024 were $412.9 million compared to $335.0 million during the same period in 2023. Sales into the utility water market were $360.6 million, an increase of 27.4% from the prior year’s $283.1 million. Utility water net sales grew as a result of increased ultrasonic meter, ORION® Cellular endpoint, and BEACON® SaaS revenues. Sales of products into the global flow instrumentation end markets were $52.3 million compared to the prior year’s $51.9 million, an increase of 0.8%. Flow instrumentation sales increased due to steady demand across the majority of end-markets and applications.

Current wording

The Company's net sales for the three months ended September 30, 2024 were $208.4 million, an increase of 11.9% compared to $186.2 million during the same period in 2023. Sales into the utility water market were $183.0 million, an increase of 13.8% from the prior year’s $160.8 million. The Company's net sales grew as a result of increased smart water solutions including higher sales across various hardware, communication and BEACON SaaS solutions. Sales of products into the flow instrumentation end markets were $25.4 million in the third quarter of 2024 and 2023. Flow instrumentation sales were flat on steady order demand within the water-focused end markets, generally offset by declines across de-emphasized applications.

Previous wording

Total operating earnings for the three months ended June 30, 2024 were $41.5 million, or 19.2% of sales, compared to $29.5 million, or 16.8% of sales, in the comparable prior year quarter. Gross margin dollars increased $15.9 million, with gross margin as a percent of sales of 39.4%, a slight decrease from 39.5% in the prior year comparable quarter. Gross margin in the current quarter benefited from increased sales volumes and favorable sales mix offset by inflationary cost increases. Selling, engineering and administration (“SEA”) expenses were $43.9 million or 20.2% of sales compared to $39.9 million or 22.7% in the comparable prior year quarter. The increase in SEA expenses was the result of continued growth-related spending including higher headcount, merit increases, incentive compensation and R&D expenses. The year-over-year improvement in SEA expense as a percent of sales is the result of effective spending controls and higher sales.

Current wording

Total operating earnings for the three months ended September 30, 2024 were $40.6 million, or 19.5% of sales, compared to $31.4 million, or 16.9% of sales, in the comparable prior year quarter. Gross margin dollars increased $11.2 million, with gross margin as a percent of sales of 40.2%, an increase from 39.1% of sales in the prior year comparable quarter. Gross margin improvement in the current year was driven by positive sales mix, including strong AMI and software-related sales, as well as ongoing price/cost benefit and operating execution. Selling, engineering and administration (“SEA”) expenses were $43.3 million or 20.8% of sales compared to $41.3 million or 22.2% of sales in the comparable prior year quarter. The increase in spending primarily relates to higher personnel-related investments, while the year-over-year improvement in SEA expense leverage was the result of effective spending controls and higher sales.

Previous wording

The provision for income taxes as a percentage of earnings before income taxes for the quarter ended June 30, 2024 was 23.8% compared to 25.8% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Current wording

The provision for income taxes as a percentage of earnings before income taxes for the quarter ended September 30, 2024 was 25.3% compared to 20.3% for the comparable prior year period. The prior year quarter effective tax rate included a discrete income tax benefit related to stock option exercises and restricted stock vesting transactions. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Previous wording

As a result of the above-mentioned items, net earnings for the three months ended June 30, 2024 were $33.1 million, or $1.12 per diluted share, compared to $22.5 million, or $0.76 per diluted share, for the same period in 2023.

Current wording

As a result of the above-mentioned items, net earnings for the three months ended September 30, 2024 were $32.0 million, or $1.08 per diluted share, compared to $26.0 million, or $0.88 per diluted share, for the same period in 2023.

Previous wording

The Company's net sales for the three months ended June 30, 2024 were $216.7 million, an increase of 23.2% compared to $175.9 million during the same period in 2023. Sales into the utility water market were $190.6 million, an increase of 26.3% from the prior year’s $150.9 million. Utility water net sales grew as a result of increased customer adoption of cellular AMI solutions, including ORION® Cellular endpoint and BEACON® SaaS revenues, as well as increased meter volumes, including both mechanical and ultrasonic meters. Sales of products into the global flow instrumentation end markets were $26.1 million compared to the prior year’s $25.0 million, an increase of 4.5%. Flow instrumentation sales increased as a result of steady order demand within the water-focused end markets and modest growth in other industrial markets.

Current wording

The Company's net sales for the nine months ended September 30, 2024 were $621.4 million, an increase of 19.2%, compared to $521.2 million during the same period in 2023. Sales into the utility water market were $543.7 million, an increase of 22.5% from the prior year’s $443.9 million. Utility water net sales grew as a result of increased adoption of smart water technologies, notably AMI. Sales increased across meters, both mechanical and ultrasonic, as well as increased ORION Cellular endpoints and BEACON SaaS revenues. Sales of products into the global flow instrumentation end markets were $77.7 million compared to the prior year’s $77.3 million, an increase of 0.5%.

Previous wording

Total operating earnings for the six months ended June 30, 2024 were $78.1 million, or 18.9% of sales, compared to $54.5 million, or 16.3% of sales, in the comparable prior year period. Gross margin dollars increased $30.3 million, with gross margin as a percent of sales of 39.4%, a slight decrease from 39.5% in the prior year comparable period. Gross margin stability was the result of increased sales volumes and favorable sales mix offset by inflationary cost increases. SEA expenses were $84.5 million or 20.5% of sales compared to $77.7 million or 23.2% in the comparable prior year period. The year-over-year improvement in SEA expense leverage is the result of effective spending controls and higher sales.

Current wording

Total operating earnings for the nine months ended September 30, 2024 were $118.7 million, or 19.1% of sales, compared to $86.0 million, or 16.5% of sales, in the comparable prior year period. Gross margin dollars increased $41.5 million, with gross margin as a percent of sales of 39.7%, an increase from 39.3% of sales in the prior year comparable period. Gross margin improvement was the result of increased sales volume and favorable structural product mix. SEA expenses were $127.7 million or 20.6% of sales compared to $119.0 million or 22.8% of sales in the comparable prior year period. The year-over-year improvement in SEA expense leverage was the result of effective spending controls and higher sales.

Previous wording

The provision for income taxes as a percentage of earnings before income taxes for the six months ended June 30, 2024 was 23.7% compared to 25.1% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Current wording

The provision for income taxes as a percentage of earnings before income taxes for the nine months ended September 30, 2024 was 24.2% compared to 23.3% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Previous wording

As a result of the above-mentioned items, net earnings for the six months ended June 30, 2024 were $62.2 million, or $2.11 per diluted share, compared to $41.9 million, or $1.42 per diluted share, for the same period in 2023.

Current wording

As a result of the above-mentioned items, net earnings for the nine months ended September 30, 2024 were $94.2 million, or $3.19 per diluted share, compared to $67.9 million, or $2.30 per diluted share, for the same period in 2023.

Previous wording

Overall, PWC increased $16.1 million compared to the previous year-end. Receivables at June 30, 2024 increased $22.7 million due to higher sales activity. Inventories increased $7.6 million due to component cost inflation, higher safety stock levels and increased sales activity. Payables at June 30, 2024 were $14.2 million higher than the prior year-end due to timing of payments and increased inventory levels.

Current wording

Overall, PWC increased $19.2 million compared to the previous year-end. Receivables at September 30, 2024 increased $9.9 million due to higher sales activity. Inventories increased $4.8 million due to component cost inflation, higher safety stock levels and increased sales activity. Payables at September 30, 2024 were $4.5 million less than year-end due primarily to a stabilizing inventory balance and timing of payments relative to quarter-end.

Previous wording

Cash provided by operations in the first six months of 2024 was $57.9 million compared to $40.7 million in the same period of 2023. Higher net earnings, offset by increased working capital balances, contributed to the increase in cash provided by operations compared to the same period in 2023.

Current wording

Cash provided by operations in the first nine months of 2024 was $103.0 million compared to $72.2 million in the same period of 2023. Higher net earnings and favorable working capital trends contributed to the increase in cash provided by operations compared to the same period in 2023.

Previous wording

Property, plant and equipment expenditures for the first six months of 2024 were $5.0 million compared to $6.9 million in the comparable prior year period.

Current wording

Property, plant and equipment expenditures for the first nine months of 2024 were $8.1 million compared to $9.9 million in the comparable prior year period.

Previous wording

Cash and cash equivalents increased to $226.2 million from $191.8 million at December 31, 2023, the result of the $57.9 million cash provided by operations, offset by $3.0 million deployed to acquire the Telog/Unity net assets and payment of quarterly dividends.

Current wording

Cash and cash equivalents increased to $259.0 million from $191.8 million at December 31, 2023, the result of the $103.0 million cash provided by operations, offset by the $3.0 million deployed to acquire the Telog/Unity net assets and payment of quarterly dividends.

Previous wording

The Company's credit facility includes a $150.0 million multi-currency line of credit that supports commercial paper (up to $100.0 million). The facility includes several features that enhance the Company's financial flexibility including an increase feature, acquisition holiday, and favorable financial covenants. The Company was in compliance with all covenants as of June 30, 2024. The Company believes that its operating cash flows, available borrowing capacity, and its ability to raise capital provide adequate resources to fund ongoing operating requirements, future capital expenditures and the development of new products. The Company had $154.3 million of unused credit lines available at June 30, 2024.

Current wording

The Company's credit facility includes a $150.0 million multi-currency line of credit that supports commercial paper (up to $100.0 million). The facility includes several features that enhance the Company's financial flexibility including an increase feature, acquisition holiday, and favorable financial covenants. The Company was in compliance with all covenants as of September 30, 2024. The Company believes that its operating cash flows, available borrowing capacity, and its ability to raise capital provide adequate resources to fund ongoing operating requirements, future capital expenditures and the development of new products. The Company had $154.5 million of unused credit lines available at September 30, 2024.

Previous wording

The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances with respect to these specific matters or with respect to sites formerly or currently owned or operated by the Company, off-site disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the Company and such amounts could be material. Expenditures for compliance with environmental control provisions and regulations during 2023 and the first two quarters of 2024 were not material.

Current wording

Company, off-site disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the Company and such amounts could be material. Expenditures for compliance with environmental control provisions and regulations during 2023 and the first three quarters of 2024 were not material.