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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-06706

 

BADGER METER, INC.

(Exact name of registrant as specified in its charter)

 

Wisconsin

 

39-0143280

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

4545 W. Brown Deer Road

Milwaukee, Wisconsin

 

53233

(Address of principal executive offices)

 

(Zip code)

 

 

(414) 355-0400

 

 

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

BMI

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

Large accelerated filer

 

Smaller reporting company

Accelerated filer

 

Emerging growth company

Non‑accelerated filer

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of April 13, 2022 there were 29,268,722 shares of Common stock outstanding with a par value of $1 per share.

 

 


Table of Contents

 

BADGER METER, INC.

Quarterly Report on Form 10-Q for the Period Ended March 31, 2022

Index

 

 

Page No.

 

 

Part I. Financial Information:

 

 

 

 

Item 1

Financial Statements (unaudited):

4

 

 

 

 

Consolidated Condensed Balance Sheets - March 31, 2022 and December 31, 2021

4

 

 

 

 

Consolidated Condensed Statements of Operations - Three Months Ended March 31, 2022 and 2021

5

 

 

 

 

Consolidated Condensed Statements of Comprehensive Income - Three Months Ended March 31, 2022 and 2021

6

 

 

 

 

Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 2022 and 2021

7

 

 

 

 

Consolidated Condensed Statements of Shareholders’ Equity – Three Months Ended March 31, 2022 and 2021

8

 

 

 

 

Notes to Unaudited Consolidated Condensed Financial Statements

9

 

 

 

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

14

 

 

 

Item 3

Quantitative and Qualitative Disclosures about Market Risk

19

 

 

 

Item 4

Controls and Procedures

19

 

 

Part II. Other Information:

 

 

 

 

Item 1A

Risk Factors

20

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

20

 

 

 

Item 6

Exhibits

20

 

 

Signatures

21

 

2


Table of Contents

 

Special Note Regarding Forward Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, as well as other information provided from time to time by Badger Meter, Inc. (the “Company” or "Badger Meter") 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 words “anticipate,” “believe,” “estimate,” “expect,” “think,” “should,” “could” and “objective” or similar expressions are intended to identify forward looking statements. All such forward looking statements are based on the Company’s then current views and assumptions and involve risks and uncertainties. See Item 1A "Risk Factors" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

3


Table of Contents

 

Part I – Financial Information

Item 1 Financial Statements

BADGER METER, INC.

Consolidated Condensed Balance Sheets

 

 

 

March 31,

 

 

December 31,

 

 

 

(Unaudited)

 

 

 

 

 

 

(In thousands)

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

89,219

 

 

$

87,174

 

Receivables

 

 

78,147

 

 

 

65,866

 

Inventories:

 

 

 

 

 

 

Finished goods

 

 

25,755

 

 

 

25,991

 

Work in process

 

 

22,128

 

 

 

24,747

 

Raw materials

 

 

55,137

 

 

 

48,873

 

Total inventories

 

 

103,020

 

 

 

99,611

 

Prepaid expenses and other current assets

 

 

10,891

 

 

 

8,709

 

Total current assets

 

 

281,277

 

 

 

261,360

 

Property, plant and equipment, at cost

 

 

216,583

 

 

 

216,796

 

Less accumulated depreciation

 

 

(140,514

)

 

 

(138,746

)

Net property, plant and equipment

 

 

76,069

 

 

 

78,050

 

Intangible assets, at cost less accumulated amortization

 

 

61,252

 

 

 

64,176

 

Other assets

 

 

16,541

 

 

 

15,390

 

Deferred income taxes

 

 

7,512

 

 

 

7,529

 

Goodwill

 

 

103,287

 

 

 

104,313

 

Total assets

 

$

545,938

 

 

$

530,818

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Payables

 

$

52,437

 

 

$

41,859

 

Accrued compensation and employee benefits

 

 

12,104

 

 

 

20,644

 

Warranty and after-sale costs

 

 

12,409

 

 

 

12,868

 

Other current liabilities

 

 

11,559

 

 

 

6,775

 

Total current liabilities

 

 

88,509

 

 

 

82,146

 

Other long-term liabilities

 

 

33,033

 

 

 

29,804

 

Deferred income taxes

 

 

5,214

 

 

 

5,385

 

Accrued non-pension postretirement benefits

 

 

5,079

 

 

 

5,214

 

Other accrued employee benefits

 

 

4,222

 

 

 

5,199

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common stock

 

 

37,221

 

 

 

37,221

 

Capital in excess of par value

 

 

49,758

 

 

 

49,224

 

Reinvested earnings

 

 

362,046

 

 

 

353,535

 

Accumulated other comprehensive (loss) income

 

 

(2,179

)

 

 

136

 

Less: Treasury stock, at cost

 

 

(36,965

)

 

 

(37,046

)

Total shareholders’ equity

 

 

409,881

 

 

 

403,070

 

Total liabilities and shareholders’ equity

 

$

545,938

 

 

$

530,818

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

4


Table of Contents

 

BADGER METER, INC.

Consolidated Condensed Statements of Operations

 

 

 

Three Months Ended March 31,

 

 

 

(Unaudited)

 

 

 

(In thousands except share and per share amounts)

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Net sales

 

$

132,402

 

 

$

117,842

 

Cost of sales

 

 

81,679

 

 

 

68,480

 

Gross margin

 

 

50,723

 

 

 

49,362

 

Selling, engineering and administration

 

 

31,861

 

 

 

31,615

 

Operating earnings

 

 

18,862

 

 

 

17,747

 

Interest expense, net

 

 

13

 

 

 

7

 

Other pension and postretirement costs

 

 

32

 

 

 

31

 

Earnings before income taxes

 

 

18,817

 

 

 

17,709

 

Provision for income taxes

 

 

4,457

 

 

 

3,928

 

Net earnings

 

$

14,360

 

 

$

13,781

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic

 

$

0.49

 

 

$

0.47

 

Diluted

 

$

0.49

 

 

$

0.47

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.20

 

 

$

0.18

 

 

 

 

 

 

 

 

Shares used in computation of earnings per share:

 

 

 

 

 

 

Basic

 

 

29,198,888

 

 

 

29,098,490

 

Impact of dilutive securities

 

 

164,438

 

 

 

218,098

 

Diluted

 

 

29,363,326

 

 

 

29,316,588

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

5


Table of Contents

 

BADGER METER, INC.

Consolidated Condensed Statements of Comprehensive Income

 

 

 

Three Months Ended March 31,

 

 

 

(Unaudited)

 

 

 

(In thousands)

 

 

 

2022

 

 

2021

 

Net earnings

 

$

14,360

 

 

$

13,781

 

Other comprehensive loss:

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(2,315

)

 

 

(714

)

Pension and postretirement benefits, net of tax

 

 

-

 

 

 

3

 

Comprehensive income

 

$

12,045

 

 

$

13,070

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

6


Table of Contents

 

BADGER METER, INC.

Consolidated Condensed Statements of Cash Flows

 

 

 

Three Months Ended March 31,

 

 

 

(Unaudited)
(In thousands)

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

Net earnings

 

$

14,360

 

 

$

13,781

 

Adjustments to reconcile net earnings to net cash provided by operations:

 

 

 

 

 

 

Depreciation

 

 

2,760

 

 

 

2,873

 

Amortization

 

 

4,016

 

 

 

4,066

 

Deferred income taxes

 

 

(34

)

 

 

38

 

Noncurrent employee benefits

 

 

(112

)

 

 

81

 

Stock-based compensation expense

 

 

615

 

 

 

374

 

Changes in:

 

 

 

 

 

 

Receivables

 

 

(12,509

)

 

 

3,864

 

Inventories

 

 

(3,763

)

 

 

1,284

 

Payables

 

 

10,749

 

 

 

4,291

 

Prepaid expenses and other assets

 

 

(2,904

)

 

 

(428

)

Other liabilities

 

 

(3,928

)

 

 

332

 

Total adjustments

 

 

(5,110

)

 

 

16,775

 

Net cash provided by operations

 

 

9,250

 

 

 

30,556

 

Investing activities:

 

 

 

 

 

 

Property, plant and equipment expenditures

 

 

(1,141

)

 

 

(1,759

)

Acquisitions, net of cash acquired

 

 

-

 

 

 

(44,561

)

Net cash used for investing activities

 

 

(1,141

)

 

 

(46,320

)

Financing activities:

 

 

 

 

 

 

Dividends paid

 

 

(5,869

)

 

 

(5,239

)

Proceeds from exercise of stock options

 

 

-

 

 

 

352

 

Issuance of treasury stock

 

 

-

 

 

 

42

 

Net cash used for financing activities

 

 

(5,869

)

 

 

(4,845

)

Effect of foreign exchange rates on cash

 

 

(195

)

 

 

(262

)

Increase (Decrease) in cash and cash equivalents

 

 

2,045

 

 

 

(20,871

)

Cash and cash equivalents – beginning of period

 

 

87,174

 

 

 

72,273

 

Cash and cash equivalents – end of period

 

$

89,219

 

 

$

51,402

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

7


Table of Contents

 

BADGER METER, INC.

Consolidated Condensed Statements of Shareholders’ Equity

 

 

 

Quarter ended March 31,

 

 

 

Common
Stock at $1
par value*

 

 

Capital in
excess of
par value

 

 

Reinvested
earnings

 

 

Accumulated
other
comprehensive
income
(loss)

 

 

Treasury
stock (at cost)

 

 

Total

 

 

 

(Unaudited)

 

 

 

(In thousands except share and per share amounts)

 

Balance, December 31, 2020

 

$

37,221

 

 

$

44,964

 

 

$

314,850

 

 

$

1,313

 

 

$

(37,089

)

 

$

361,259

 

Net earnings

 

 

-

 

 

 

-

 

 

 

13,781

 

 

 

-

 

 

 

-

 

 

 

13,781

 

Pension and postretirement benefits
   (net of $(
1) tax effect)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3

 

 

 

-

 

 

 

3

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(714

)

 

 

-

 

 

 

(714

)

Cash dividends of $0.18 per share

 

 

-

 

 

 

-

 

 

 

(5,248

)

 

 

-

 

 

 

-

 

 

 

(5,248

)

Stock options exercised

 

 

-

 

 

 

281

 

 

 

-

 

 

 

-

 

 

 

71

 

 

 

352

 

Stock-based compensation

 

 

-

 

 

 

374

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

374

 

Issuance of treasury stock (23 shares)

 

 

-

 

 

 

(20

)

 

 

-

 

 

 

-

 

 

 

62

 

 

 

42

 

Balance, March 31, 2021

 

$

37,221

 

 

$

45,599

 

 

$

323,383

 

 

$

602

 

 

$

(36,956

)

 

$

369,849

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

$

37,221

 

 

$

49,224

 

 

$

353,535

 

 

$

136

 

 

$

(37,046

)

 

$

403,070

 

Net earnings

 

 

-

 

 

 

-

 

 

 

14,360

 

 

 

-

 

 

 

-

 

 

 

14,360

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,315

)

 

 

-

 

 

 

(2,315

)

Cash dividends of $0.20 per share

 

 

-

 

 

 

-

 

 

 

(5,849

)

 

 

-

 

 

 

-

 

 

 

(5,849

)

Stock-based compensation

 

 

-

 

 

 

615

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

615

 

Issuance of treasury stock (21 shares)

 

 

-

 

 

 

(81

)

 

 

-

 

 

 

-

 

 

 

81

 

 

 

-

 

Balance, March 31, 2022

 

$

37,221

 

 

$

49,758

 

 

$

362,046

 

 

$

(2,179

)

 

$

(36,965

)

 

$

409,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Each common share of stock equals $1 par value; therefore, the number of common shares is the same as the dollar value.

See accompanying notes to unaudited consolidated condensed financial statements.

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BADGER METER, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1 Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated condensed financial statements of Badger Meter contain all adjustments (consisting only of normal recurring accruals except as otherwise discussed) necessary to present fairly the Company’s consolidated condensed financial position at March 31, 2022 and December 31, 2021, results of operations, comprehensive income, cash flows and statements of shareholders’ equity for the three-month periods ended March 31, 2022 and 2021. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to current year presentation.

Note 2 Additional Financial Information Disclosures

The consolidated condensed balance sheet at December 31, 2021 was derived from amounts included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Refer to the notes to consolidated financial statements included in that report for a description of the Company’s accounting policies and for additional details of the Company’s financial condition. The details in those notes have not changed except as discussed below and as a result of normal adjustments in the interim.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents.

Warranty and After-Sale Costs

The Company estimates and records provisions for warranties and other after-sale costs in the period in which the sale is recorded, based on a lag factor and historical warranty claim experience. After-sale costs represent a variety of activities outside of the written warranty policy, such as investigation of unanticipated problems after the customer has installed the product, or analysis of water quality issues. Changes in the Company’s warranty and after-sale costs reserve are as follows:

 

 

 

March 31,

 

(In thousands)

 

2022

 

 

2021

 

Balance at beginning of period

 

$

12,868

 

 

$

11,617

 

Net additions charged to earnings

 

 

1,100

 

 

 

1,420

 

Costs incurred

 

 

(1,559

)

 

 

(579

)

Balance at end of period

 

$

12,409

 

 

$

12,458

 

 

Note 3 Accumulated Other Comprehensive (Loss) Income

Components of and changes in accumulated other comprehensive loss at March 31, 2022 are as follows:

 

(In thousands)

 

Unrecognized
pension and
postretirement
 benefits

 

 

Foreign currency

 

 

Total

 

Balance at beginning of period

 

$

394

 

 

$

(258

)

 

$

136

 

Other comprehensive loss before reclassifications

 

 

-

 

 

 

(2,315

)

 

 

(2,315

)

Accumulated other comprehensive loss

 

$

394

 

 

$

(2,573

)

 

$

(2,179

)

 

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Table of Contents

 

 

Components of and changes in accumulated other comprehensive income at March 31, 2021 are as follows:

 

(In thousands)

 

Unrecognized
pension and
postretirement
 benefits

 

 

Foreign currency

 

 

Total

 

Balance at beginning of period

 

$

55

 

 

$

1,258

 

 

$

1,313

 

Other comprehensive income before reclassifications

 

 

-

 

 

 

(714

)

 

 

(714

)

Amounts reclassified from accumulated other comprehensive income, net of tax of ($1)

 

 

3

 

 

 

-

 

 

 

3

 

Net current period other comprehensive income, net of tax

 

 

3

 

 

 

(714

)

 

 

(711

)

Accumulated other comprehensive income

 

$

58

 

 

$

544

 

 

$

602

 

 

Details of reclassifications out of accumulated other comprehensive income during the three months ended March 31, 2021 are immaterial.

 

Note 4 Acquisitions

 

Acquisitions are accounted for under the purchase method, and accordingly, the results of operations were included in the Company's financial statements from the date of acquisition. The acquisitions did not have a material impact on the Company's consolidated financial statements or the notes thereto.

Effective January 1, 2021, the Company acquired 100% of the outstanding stock of Analytical Technology, LLC (“ATi”), headquartered in Collegeville, Pennsylvania, a provider of water quality monitoring systems.

The total purchase consideration for ATi, net of cash acquired, was $44.0 million. The Company's allocation of the purchase price at December 31, 2021 included $3.9 million of receivables, $3.9 million of inventory, $2.5 million of other assets, $21.0 million of intangibles and $16.4 million of goodwill that is deductible for tax purposes. The intangible assets acquired are primarily customer relationships, developed technology and trademarks with estimated average useful lives of 12 to 15 years. The Company also assumed $1.4 million of accounts payable, $0.6 million of deferred tax liabilities and $1.7 million of other liabilities as part of the acquisition. The allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of December 31, 2021, the Company had completed its analysis for estimating the fair value of the assets acquired with no additional adjustments.

 

Effective November 2, 2020, the Company acquired 100% of the outstanding stock of s::can GmbH and subsidiaries (“s::can”) headquartered in Vienna, Austria. s::can specializes in optical water quality sensing solutions that provide real-time measurement of a variety of parameters in water and wastewater utilizing in-line monitoring systems and other applications.

 

The total purchase consideration for s::can, net of cash acquired, was $30.5 million, which was inclusive of $1.3 million of working capital adjustments. The Company's allocation of the purchase price at December 31, 2021 included $2.6 million of receivables, $4.3 million of inventory, $1.2 million of other assets, $12.7 million of intangibles and $17.7 million of goodwill that is not deductible for tax purposes. The intangible assets acquired are primarily customer relationships and developed technology with an estimated average useful life of 12 years. The Company also assumed $3.5 million of accounts payable, $3.2 million of deferred tax liabilities and $1.3 million of other liabilities as part of the acquisition. The allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of December 31, 2021, the Company had completed its analysis for estimating the fair value of the assets acquired with no additional adjustments.

Note 5 Contingencies, Litigation and Commitments

In the normal course of business, the Company is named in legal proceedings. There are currently no material legal proceedings pending with respect to the Company.

The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances with respect to 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 2021 and the first quarter of 2022 were not material.

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Table of Contents

 

The Company relies on single suppliers for most brass castings and certain resin and electronic subassemblies in several of its product lines. The Company believes these items would be available from other sources, but that the loss of certain suppliers could result in a higher cost of materials, delivery delays, short-term increases in inventory and higher quality control costs in the short term. The Company attempts to mitigate these risks by working closely with key suppliers, purchasing minimal amounts from alternative suppliers and by purchasing business interruption insurance where appropriate.

The Company reevaluates its exposures on a periodic basis and makes adjustments to reserves as appropriate.

Note 6 Income Taxes

The Company is subject to income taxes in the United States and numerous foreign jurisdictions. The Company’s income tax positions are based on interpretations of income tax laws and rulings in each of the jurisdictions that the Company operates. Significant judgment is required in determining the worldwide provision for income taxes and recording the related deferred tax assets and liabilities. The Company’s deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income for the years in which the assets or liabilities are expected to be realized or settled. Interim provisions are tied to an estimate of the overall annual rate which can vary due to the relationship of foreign and domestic earnings, state taxes and available deductions, credits and discrete items.

The Company’s earnings before incomes taxes, provision for income taxes, and effective income tax rate are as follows:

 

 

 

Three months ended March 31,

 

(In thousands)

 

2022

 

 

2021

 

Earnings before income taxes

 

$

18,817

 

 

$

17,709

 

Provision for income taxes

 

 

4,457

 

 

 

3,928

 

Effective income tax rate

 

 

23.7

%

 

 

22.2

%

 

Note 7 Fair Value Measurements of Financial Instruments

The Company applies the accounting standards for fair value measurements and disclosures for its financial assets and financial liabilities. The carrying amounts of cash and cash equivalents, receivables and payables in the financial statements approximate their fair values due to the short-term nature of these financial instruments. Included in other assets are insurance policies on various individuals who were previously employed by the Company. The carrying amounts of these insurance policies approximate their fair value.

Note 8 Subsequent Events

The Company evaluates subsequent events at the date of the balance sheet as well as conditions that arise after the balance sheet date but before the financial statements are issued. The effects of conditions that existed at the balance sheet date are recognized in the financial statements. Events and conditions arising after the balance sheet date but before the financial statements are issued are evaluated to determine if disclosure is required to keep the financial statements from being misleading. To the extent such events and conditions exist, if any, disclosures are made regarding the nature of events and the estimated financial effects for those events and conditions. For purposes of preparing the accompanying consolidated financial statements and the notes to these financial statements, the Company evaluated subsequent events through the date that the accompanying financial statements were issued, and has determined that no material subsequent events exist through the date of this filing.

Note 9 Revenue Recognition

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in contracts include the sale of utility water and flow instrumentation products, such as flow meters and radios, quality sensing equipment, software access and other ancillary services. Contracts generally state the terms of sale, including the description, quantity and price of each product or service. Since the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the majority of the Company's contracts do not contain variable consideration. The Company establishes a provision for estimated warranty and returns as well as certain after sale costs as discussed in Note 2 "Additional Financial Information Disclosures" in the Notes to Unaudited Consolidated Condensed Financial Statements.

The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

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Table of Contents

 

Information regarding revenues disaggregated by geographic area is as follows:

 

 

Three months ended March 31,

 

(In thousands)

2022

 

 

2021

 

Revenues:

 

 

 

 

 

United States

$

112,755

 

 

$

98,742

 

Foreign:

 

 

 

 

 

Asia

 

4,197

 

 

 

4,009

 

Canada

 

2,963

 

 

 

3,336

 

Europe

 

8,232

 

 

 

8,644

 

Mexico

 

576

 

 

 

1,105

 

Middle East

 

1,659

 

 

 

1,628

 

Other

 

2,020

 

 

 

378

 

Total

$

132,402

 

 

$

117,842

 

 

Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows:

 

 

 

Three months ended March 31,

(In thousands)

 

2022

 

2021

Revenue recognized over time

 

$

7,708

 

5.8%

 

$

6,461

 

5.5%

Revenue recognized at a point in time

 

 

124,694

 

94.2%

 

 

111,381

 

94.5%

Total

 

$

132,402

 

100.0%

 

$

117,842

 

100.0%

 

The majority of the Company's revenue that is recognized over time relates to the BEACON® AMA software as a service, but also includes training, certain installation and other revenues. The majority of the Company's revenue recognized at a point in time is for the sale of utility and flow instrumentation products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during shipping.

 

The Company performs its obligations under a contract by shipping products or performing services in exchange for consideration. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable to the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods or services and the Company has not transferred control of the goods or services.

The closing balances of the Company's receivables and contract liabilities are as follows:

 

 

 

March 31,
2022

 

 

December 31,
2021

 

(In thousands)

 

 

 

 

 

 

Receivables

 

$

78,147

 

 

$

65,866

 

Contract liabilities

 

 

30,339

 

 

 

30,194

 

 

Contract liabilities are included in Payables and Other long-term liabilities on the Company’s Consolidated Condensed Balance Sheets. The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables in the three-month period ended March 31, 2022 and twelve-month period ended December 31, 2021.

 

A performance obligation is a promise to transfer a distinct good or service to the customer. At contract inception, the Company assesses the products and services promised in its contracts with customers. The Company then identifies performance obligations to transfer distinct products or services to the customer. In order to identify performance obligations, the Company considers all of the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

 

The Company's performance obligations are satisfied at a point in time or over time as work progresses. The majority of the Company's revenue recognized at a point in time is for the sale of utility and flow instrumentation products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process. The majority of the Company's revenue that is recognized over time relates to the BEACON AMA software as a service.

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Table of Contents

 

As of March 31, 2022, the Company had certain contracts with unsatisfied performance obligations. For contracts recorded as contract liabilities, $30.3 million was the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that revenue recognized from satisfying those performance obligations will be approximately $6.8 million in 2022, $4.2 million in 2023, $3.7