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Badger Meter (BMI) Q1 Earnings & Revenues Lag Estimates, Rise Y/Y

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Badger Meter, Inc. BMI reported earnings of 49 cents per share for first-quarter 2022, slightly missing the Zacks Consensus Estimate of 51 cents. Nonetheless, the bottom line compares favorably with the year-ago quarter’s earnings of 47 cents.

Net earnings in the reported quarter were $14.4 million compared with $13.8 million in the year-ago quarter. The year-over-year improvement can be primarily attributed to higher revenues.

Revenues

Quarterly net sales increased to $132.4 million from $117.8 million in the year-ago quarter. The 12% rise was primarily due to record order rates, driven by robust demand and accelerated adoption of innovative digital water technologies. Effective expense management actions and value-based pricing resulted in improved spending leverage, which helped offset inflationary cost pressure and supply-chain challenges.

However, the top line lagged the consensus mark of $134 million.

Badger Meter, Inc. Price, Consensus and EPS Surprise

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

Badger Meter, Inc. price-consensus-eps-surprise-chart | Badger Meter, Inc. Quote

Segmental Performance

During the reported quarter, utility water sales soared 15%, owing to record order momentum and backlog conversion. Also, strength in ultrasonic meters and ORION Cellular endpoint sales along with higher BEACON Software-as-a-Service (SaaS) revenues acted as major tailwinds. Intermittent supply chain disruptions partly offset this.

Flow instrumentation sales were flat year over year as a result of supply-chain woes that impacted manufacturing output despite continued strong order trends across the majority of end-market applications globally.

Other Details

During the March-end quarter, gross profit was $50.7 million, up 2.8% from $49.3 million in the year-earlier quarter. The gross margin was 38.3%, down from the 41.9% recorded in the prior-year quarter. This downside in the margin was primarily driven by inflationary pressure coupled with production volatility caused by intermittent component delays. Operating earnings were $18.9 million or 14.2% of sales compared with respective tallies of $17.7 million and 15.1% in the year-earlier quarter.

Selling, engineering, and administration (SEA) expenses were $31.9 million or 24.1% of sales compared with $31.6 million or 26.8% in the prior-year quarter. Effective spending controls and higher sales mainly drove the year-over-year improvement in SEA expense leverage.

Cash Flow & Liquidity

During the first quarter of 2022, Badger Meter generated $9.3 million of net cash from operating activities compared with $30.6 million a year ago. As of Mar 31, 2022, the company had $89.2 million of cash and cash equivalents and $88.5 million of total current liabilities compared with the respective tallies of $87.2 million and $82.1 million a year ago.

Outlook

Backed by strong industry demand and its comprehensive offering of innovative and customized smart water solutions, Badger Meter’s near-term outlook remains bullish. Thanks to value-based pricing efforts, the company continues to expand its portfolio of smart water solutions while driving its adoption. The company will continue to tackle increasing inflationary cost pressure across the business. The company will also continue to address customer requirements to enhance its operational efficiency and resiliency by leveraging its industry-leading ORION Cellular endpoints and BEACON digital platform.

Despite a challenging macro environment, Badger Meter is well poised to enable strategic, tuck-in mergers and acquisitions to provide differentiated offerings across global markets, utilizing its healthy balance sheet.

Zacks Rank & Stocks to Consider

Badger Meter currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader technology space include Bel Fuse BELFB, American Software AMSWA and Iridium Communications IRDM. While Bel Fuse sports a Zacks Rank of 1 (Strong Buy), American Software and Iridium carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bel Fuse has a projected earnings growth rate of 3.65% for 2023. The Zacks Consensus Estimate for Bel Fuse’s 2023 earnings has remained unchanged in the past 30 days.

Bel Fuse’s first-quarter 2022 earnings per share are estimated at 22 cents, suggesting year-over-year growth of 195.65%. Shares of BELFB have dropped 2.5% in the past year.

American Software has a projected earnings growth rate of 24.24% for fiscal 2022. The Zacks Consensus Estimate for American Software’s fiscal 2022 earnings has been revised upward by 4 cents in the past 60 days.

American Software’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 92.14%. Shares of AMSWA have declined 4.5% in the past year.

Iridium has a projected earnings growth rate of 157.14% for 2022. The Zacks Consensus Estimate for Iridium’s 2022 earnings has been revised upward by 2 cents in the past 60 days.

Iridium’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and met the same twice, the average surprise being 39.4%. Shares of IRDM have rallied 17.5% in the past year.


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