Badger Meter sales top $400 million for first time despite slower growth

Net income up 7 percent for the year

Posted by Arthur Thomas from BizTime on Feb. 6, 2018

Brown Deer-based Badger Meter Inc. reported more than $400 million in revenue for the first time in company history last year, but executives acknowledged they’d like to see stronger topline growth.

Revenue was up 2.2 percent for the year to $402.4 million, including a 3.8 percent increase in the fourth quarter to $96.7 million.

Rick Johnson, Badger Meter chief financial officer, said the company is aiming for revenue growth in the high single digits moving forward.

Rich Meeusen, Badger Meter chairman, president and chief executive officer, said growth for the year was hampered by uncertainty around a potential federal infrastructure bill. He said municipalities delayed projects to see if they could get help with funding, noting the Obama administration’s infrastructure investments were “a Santa Claus thing where they were just giving gifts out to the states and the cities.”

Meeusen said the infrastructure investments discussed by the Trump administration have focused more on matching funds from the local level and that’s prompting some projects to move ahead instead of waiting for funding.

“When you look at 2018, we believe we’re going to see a return to normal growth rates,” Meeusen said.

Growth for the year was primarily driven by higher sales of the company’s flow instrumentation projects, which are sold into oil and gas and industrial markets. In the fourth quarter alone that part of the business was up more than 10 percent.

“We are pleased with the rebound in flow instrumentation,” Meeusen said.

Despite the sluggish growth overall, Badger Meter did see a 7 percent increase in net income to $34.6 million for the year. Earnings for the year increased from $1.11 to $1.19 per diluted share.

The fourth quarter included an 18.2 percent increase in earnings to $7.2 million, with earnings up from 21 to 25 cents per diluted share.

Gross margins were up from 36 percent last year to 40.4 percent this year. Johnson said the increase in margins was largely driven by more sales of the company’s higher technology products. He cautioned Badger Meter’s margin can fluctuate from quarter to quarter based on product mix.

“I would not expect to see margins over 40 percent for the year, but they are still going to be strong,” Meeusen said.

The company also saw a benefit from its acquisition of distributor Carolina Meter and Supply. Badger Meter has acquired three of its major distributors since 2014. When it first embarked on the strategy, sales were split evenly between company-owned and non-company-owned distributors. Today, only 20 percent of products are sold through non-Badger Meter owned distributors.

Meeusen said there are still a couple distributors the company would like to buy and one of those deals might happen this year.

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