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Badger Meter (BMI) Beats on Q4 Earnings, Falters on Revenues

Supriyo Bose

Badger Meter, Inc. BMI reported relatively healthy fourth-quarter 2018 results with year-over-year increase in revenues and earnings on the back of solid growth dynamics. The company expects to continue this growth momentum in 2019 with leading technology offerings and a customer-focused strategy.

Net Income

On a GAAP basis, net earnings for the fourth quarter were $11.2 million or 39 cents per share compared with $7.2 million or 25 cents per share in the year-ago quarter. The increase, despite higher cost of sales, was primarily due to higher revenues and lower provision for income tax.

Adjusted net earnings increased 60% year over year to 40 cents per share, and beat the Zacks Consensus Estimate by a couple of cents.

Badger Meter, Inc. Price, Consensus and EPS Surprise

 

Badger Meter, Inc. Price, Consensus and EPS Surprise | Badger Meter, Inc. Quote

For full-year 2018, GAAP earnings declined to $27.8 million or 95 cents per share from $34.6 million or $1.19 per share in 2017, owing to pension and postretirement costs along with higher operating costs. However, adjusted earnings for the full year were $44.9 million or $1.54 per share compared with $34.6 million or $1.19 per share in 2017.

Revenues

Quarterly net sales increased 8% year over year to $104.4 million due to high domestic municipal sales of flagship products and favorable product mix with higher-than-average sales growth of meters. However, the top line missed the Zacks Consensus Estimate of $105 million. For full-year 2018, net sales improved to $433.7 million from $402.4 million.

Other Quarter Details

Cost of sales rose from $57.6 million to $64.3 million. Gross profit came in at $40.2 million, up from $39 million in the year-earlier quarter for respective margins of 38.5% and 40.3%. Adjusted operating earnings were $15.3 million or 14.6% of sales, which improved 20 basis points year over year from 14.4%.

Liquidity

As of Dec 31, 2018, Badger Meter had a cash balance of $13.1 million and short-term debt of $18.1 million compared with respective tallies of $11.2 million and $44.6 million a year ago. Free cash flow for 2018 was approximately $52 million compared with $35 million in the prior year.

Moving Forward

Management remains optimistic about its prospects for 2019 supported by a number of reasons like a solid backlog, continued customer acceptance of its new products and the moderating of copper prices. The company continues to make progress in its various innovative technologies, including D-Flow ultrasonic technology. The company focuses on enhancing shareholders’ value through organic and inorganic investments supported by its strong balance sheet.

Badger Meter currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Allied Motion Technologies Inc. AMOT, sporting a Zacks Rank #1 (Strong Buy), and Nanometrics Incorporated NANO and InterDigital, Inc. IDCC, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allied Motion Technologies has a long-term earnings growth expectation of 10%. It delivered average positive earnings surprise of 41.2% in the trailing four quarters, beating estimates thrice.

Nanometrics Incorporated has a long-term earnings growth expectation of 12%. It delivered average positive earnings surprise of 20.5% in the trailing four quarters, beating estimates in each.

InterDigital has a long-term earnings growth expectation of 15%. It delivered average positive earnings surprise of 148.4% in the trailing four quarters, beating estimates in each.

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