10-Q

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, 2020                

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 8, 2020, there were 29,117,383 shares of Common stock outstanding with a par value of $1 per share.

BADGER METER, INC.

Quarterly Report on Form 10-Q for the Period Ended March 31, 2020

Index

		Page No.
Part I. Financial Information:
Item 1	Financial Statements (unaudited):	4
	Consolidated Condensed Balance Sheets - March 31, 2020 and December 31, 2019	4
	Consolidated Condensed Statements of Operations - Three Months Ended March 31, 2020 and 2019	5
	Consolidated Condensed Statements of Comprehensive Income - Three Months Ended March 31, 2020 and 2019	6
	Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 2020 and 2019	7
	Consolidated Condensed Statements of Shareholders’ Equity – Three Months Ended March 31, 2020 and 2019	8
	Notes to Unaudited Consolidated Condensed Financial Statements	9
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
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	21
Item 6	Exhibits	21
Signatures		22

2

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 in the forward looking 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.  Some risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward looking statements include those described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

All of these factors are beyond the Company's control to varying degrees.  Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward looking statements contained in this Quarterly Report on Form 10-Q and are cautioned not to place undue reliance on such forward looking statements.  The forward looking statements made in this document are made only as of the date of this document and the Company assumes no obligation, and disclaims any obligation, to update any such forward looking statements to reflect subsequent events or circumstances.

3

Part I – Financial Information

Item 1  Financial Statements

BADGER METER, INC.

Consolidated Condensed Balance Sheets

	March 31,			December 31,
	(Unaudited)
	(In thousands)
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	70,376		$	48,871
Receivables		59,164			61,365
Inventories:
Finished goods		19,469			22,946
Work in process		16,776			17,728
Raw materials		38,185			41,274
Total inventories		74,430			81,948
Prepaid expenses and other current assets		7,459			7,910
Total current assets		211,429			200,094
Property, plant and equipment, at cost		211,457			209,825
Less accumulated depreciation		(126,887	)		(124,064	)
Net property, plant and equipment		84,570			85,761
Intangible assets, at cost less accumulated amortization		46,396			48,163
Other assets		15,288			15,875
Deferred income taxes		2,015			742
Goodwill		71,258			71,258
Total assets	$	430,956		$	421,893
Liabilities and shareholders’ equity
Current liabilities:
Short-term debt	$	4,400		$	4,480
Payables		35,915			31,523
Accrued compensation and employee benefits		9,181			12,754
Warranty and after-sale costs		5,981			5,583
Other current liabilities		4,979			2,907
Total current liabilities		60,456			57,247
Other long-term liabilities		23,093			22,980
Deferred income taxes		2,428			876
Accrued non-pension postretirement benefits		5,721			5,711
Other accrued employee benefits		3,537			4,011
Commitments and contingencies (Note 6)
Shareholders’ equity:
Common stock		37,220			37,200
Capital in excess of par value		42,690			41,956
Reinvested earnings		292,785			285,879
Accumulated other comprehensive (loss) income		(201	)		425
Less: Employee benefit stock		(154	)		(154	)
Treasury stock, at cost		(36,619	)		(34,238	)
Total shareholders’ equity		335,721			331,068
Total liabilities and shareholders’ equity	$	430,956		$	421,893

See accompanying notes to unaudited consolidated condensed financial statements.

4

BADGER METER, INC.

Consolidated Condensed Statements of Operations

	Three Months Ended March 31,
	(Unaudited)
	(In thousands except share and per share amounts)
	2020		2019
Net sales	$	108,508	$	104,881
Cost of sales		65,186		64,424
Gross margin		43,322		40,457
Selling, engineering and administration		27,307		26,130
Operating earnings		16,015		14,327
Interest expense, net		31		129
Other pension and postretirement costs		44		47
Earnings before income taxes		15,940		14,151
Provision for income taxes		4,086		3,327
Net earnings	$	11,854	$	10,824
Earnings per share:
Basic	$	0.41	$	0.37
Diluted	$	0.41	$	0.37
Dividends declared per common share	$	0.17	$	0.15
Shares used in computation of earnings per share:
Basic		29,042,158		29,028,964
Impact of dilutive securities		181,757		209,660
Diluted		29,223,915		29,238,624

See accompanying notes to unaudited consolidated condensed financial statements.

5

BADGER METER, INC.

Consolidated Condensed Statements of Comprehensive Income

	Three Months Ended March 31,
	(Unaudited)
	(In thousands)
	2020			2019
Net earnings	$	11,854		$	10,824
Other comprehensive income:
Foreign currency translation adjustments		(627	)		(257	)
Pension and postretirement benefits, net of tax		1			(12	)
Comprehensive income	$	11,228		$	10,555

See accompanying notes to unaudited consolidated condensed financial statements.

6

BADGER METER, INC.

Consolidated Condensed Statements of Cash Flows

	Three Months Ended March 31,
	(Unaudited) (In thousands)
	2020			2019
Operating activities:
Net earnings	$	11,854		$	10,824
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation		2,975			2,978
Amortization		3,256			3,264
Deferred income taxes		392			(1	)
Noncurrent employee benefits		88			117
Stock-based compensation expense		307			265
Changes in:
Receivables		1,385			(1,943	)
Inventories		7,437			166
Payables		4,517			4,540
Prepaid expenses and other current assets		(609	)		(2,101	)
Other liabilities		(1,064	)		(294	)
Total adjustments		18,684			6,991
Net cash provided by operations		30,538			17,815
Investing activities:
Property, plant and equipment expenditures		(1,942	)		(2,160	)
Net cash used for investing activities		(1,942	)		(2,160	)
Financing activities:
Net decrease in short-term debt		-			(7,000	)
Payment of contingent acquisition consideration		-			(1,000	)
Dividends paid		(4,938	)		(4,357	)
Proceeds from exercise of stock options		478			471
Repurchase of treasury stock		(2,467	)		(1,873	)
Issuance of treasury stock		55			52
Net cash used for financing activities		(6,872	)		(13,707	)
Effect of foreign exchange rates on cash		(219	)		(1	)
Increase in cash and cash equivalents		21,505			1,947
Cash and cash equivalents – beginning of period		48,871			13,086
Cash and cash equivalents – end of period	$	70,376		$	15,033

See accompanying notes to unaudited consolidated condensed financial statements.

7

BADGER METER, INC.

Consolidated Condensed Statements of Shareholders’ Equity

	Quarter-to-date ended March 31,
	Common Stock at $1 par value*		Capital in excess of par value			Reinvested earnings			Accumulated other comprehensive income (loss)			Employee benefit stock			Treasury stock (at cost)			Total
	(Unaudited)
	(In thousands except share and per share amounts)
Balance, December 31, 2018	$	37,198	$	38,082		$	257,313		$	580		$	(306	)	$	(29,364	)	$	303,503
Net earnings		-		-			10,824			-			-			-			10,824
Pension and postretirement benefits    (net of $4 tax effect)		-		-			-			(12	)		-			-			(12	)
Foreign currency translation		-		-			-			(257	)		-			-			(257	)
Cash dividends of $0.15 per share		-		-			(4,360	)		-			-			-			(4,360	)
Stock options exercised		2		397			-			-			-			72			471
Stock-based compensation		-		265			-			-			-			-			265
Purchase of common stock for treasury stock		-		-			-			-			-			(1,873	)		(1,873	)
Issuance of treasury stock (9 shares)		-		12			-			-			-			40			52
Balance, March 31, 2019	$	37,200	$	38,756		$	263,777		$	311		$	(306	)	$	(31,125	)	$	308,613
Balance, December 31, 2019	$	37,200	$	41,956		$	285,879		$	425		$	(154	)	$	(34,238	)	$	331,068
Net earnings		-		-			11,854			-			-			-			11,854
Pension and postretirement benefits    (net of ($1) tax effect)		-		-			-			1			-			-			1
Foreign currency translation		-		-			-			(627	)		-			-			(627	)
Cash dividends of $0.17 per share		-		-			(4,948	)		-			-			-			(4,948	)
Stock options exercised		20		438			-			-			-			20			478
Stock-based compensation		-		307			-			-			-			-			307
Purchase of common stock for treasury stock		-		-			-			-			-			(2,467	)		(2,467	)
Issuance of treasury stock (15 shares)		-		(11	)		-			-			-			66			55
Balance, March 31, 2020	$	37,220	$	42,690		$	292,785		$	(201	)	$	(154	)	$	(36,619	)	$	335,721

* 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.

8

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, 2020 and December 31, 2019, results of operations, comprehensive income, cash flows and statements of shareholders’ equity for the three-month periods ended March 31, 2020 and 2019.  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.

Note 2   Additional Financial Information Disclosures

The consolidated condensed balance sheet at December 31, 2019 was derived from amounts included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.  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:

	Three months ended March 31,
(In thousands)	2020			2019
Balance at beginning of period	$	5,583		$	4,206
Net additions charged to earnings		1,161			465
Costs incurred		(763	)		(353	)
Balance at end of period	$	5,981		$	4,318

Note 3   Employee Benefit Plans

The Company maintains supplemental non-qualified plans for certain officers and other key employees, and an Employee Savings and Stock Ownership Plan for the majority of the U.S. employees.

The Company additionally has a postretirement healthcare benefit plan that provides medical benefits for certain U.S. retirees and eligible dependents hired prior to November 1, 2004.  Employees are eligible to receive postretirement healthcare benefits upon meeting certain age and service requirements.  No employees hired after October 31, 2004 are eligible to receive these benefits.  This plan requires employee contributions to offset benefit costs.

9

The following table sets forth the components of net periodic benefit cost for the three months ended March 31, 2020 and 2019 based on December 31, 2019 and 2018 actuarial measurement dates, respectively:

	Defined pension plan benefits				Other postretirement benefits
(In thousands)	2020		2019		2020		2019
Service cost – benefits earned during the year	$	13	$	37	$	31	$	29
Interest cost on projected benefit obligations		2		10		41		53
Amortization of net loss (benefit)		1		9		-		(25	)
Net periodic benefit cost	$	16	$	56	$	72	$	57

The Company disclosed in its financial statements for the year ended December 31, 2019 that it estimated it would pay $0.4 million in other postretirement benefits in 2020 based on actuarial estimates.  As of March 31, 2020, $0.1 million of such benefits have been paid.  The Company continues to believe that its estimated payments for the full year are reasonable.  However, such estimates contain inherent uncertainties because cash payments can vary significantly depending on the timing of postretirement medical claims and the collection of the retirees’ portion of certain costs.  The amount of benefits paid in calendar year 2020 will not impact the expense for postretirement benefits for 2020.

Note 4   Accumulated Other Comprehensive Income (Loss)

Components of and changes in accumulated other comprehensive income (loss) at March 31, 2020 are as follows:

(In thousands)	Unrecognized pension and postretirement benefits		Foreign currency			Total
Balance at beginning of period	$	263	$	162		$	425
Other comprehensive (loss) before reclassifications		-		(627	)		(627	)
Amounts reclassified from accumulated other comprehensive income, net of tax of ($1)		1		-			1
Net current period other comprehensive income (loss), net of tax		1		(627	)		(626	)
Accumulated other comprehensive income (loss)	$	264	$	(465	)	$	(201	)

Details of reclassifications out of accumulated other comprehensive income (loss) during the three months ended March 31, 2020 are immaterial.     

Components of and changes in accumulated other comprehensive income (loss) at March 31, 2019 are as follows:

(In thousands)	Unrecognized pension and postretirement benefits			Foreign currency			Total
Balance at beginning of period	$	360		$	220		$	580
Other comprehensive income (loss) before reclassifications		-			(257	)		(257	)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $4		(12	)		-			(12	)
Net current period other comprehensive income (loss), net of tax		(12	)		(257	)		(269	)
Accumulated other comprehensive (loss) income	$	348		$	(37	)	$	311

10

Details of reclassifications out of accumulated other comprehensive income (loss) during the three months ended March 31, 2019 are as follows:

(In thousands)	Amount reclassified from accumulated other comprehensive income (loss)
Amortization of pension and postretirement benefits items:
Prior service benefit (1)	$	(25	)
Actuarial loss (1)		9
Total before tax		(16	)
Income tax		4
Amount reclassified out of accumulated other comprehensive loss	$	(12	)

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost in Note 3 “Employee Benefit Plans”

Note 5   Acquisition

             In the first quarter of 2019, the Company made a payment of contingent acquisition consideration of $1.0 million related to the May 1, 2017 acquisition of 100% of the outstanding common stock of D-Flow Technology AB (“D-Flow”).  There is an additional $0.9 million of contingent acquisition consideration outstanding related to the D-Flow acquisition that are anticipated to be made in the next twelve months which is recorded in Payables on the Company’s Consolidated Condensed Balance Sheet at March 31, 2020.

Note 6   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 2019 and the first quarter of 2020 were not material.

The Company relies on single suppliers for most brass castings, certain resins 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 would 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 7   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, income tax expense and effective income tax rate are as follows:

	Three months ended March 31,
(In thousands)	2020			2019
Earnings before income taxes	$	15,940		$	14,151
Income tax expense		4,086			3,327
Effective income tax rate		25.6	%		23.5	%

11

Note 8   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.  Short-term debt is comprised of notes payable drawn against the Company's lines of credit and commercial paper.  Because of its short-term nature, the carrying amount of the short-term debt also approximates fair value.  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 9   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 10   New Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies the existing guidance to enable more consistent application. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year with early adoption being permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326),” which amends the accounting for credit losses on purchased financial assets and available-for-sale debt securities with credit deterioration. This ASU requires the measurement of all expected credit losses for financial assets, including accounts receivables, held at the reporting date based upon current conditions, historical experience and reasonable forecasts. This ASU is effective for annual reporting periods beginning after December 15, 2019. The Company adopted ASU No. 2016-13 on January 1, 2020 and noted no significant changes to the Company’s financial positions or results of operations.

Note 11   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 municipal water and flow instrumentation products, such as flow meters and radios, 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.

In accordance with ASU No. 2016-10 “Revenue from Contracts with Customers” (“Topic 606”), 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 meets the disclosure objective in Topic 606 which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

12

Information regarding revenues disaggregated by geographic area is as follows:

	Three months ended March 31,
(In thousands)	2020		2019
Revenues:
United States	$	94,492	$	91,499
Foreign:
Asia		1,548		1,452
Canada		3,136		3,497
Europe		4,775		5,352
Mexico		1,970		834
Middle East		1,537		1,584
Other		1,050		663
Total	$	108,508	$	104,881

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

	Three months ended March 31,
(In thousands)	2020		2019
Revenue recognized over time	$	4,804	$	3,753
Revenue recognized at a point in time		103,704		101,128
Total	$	108,508	$	104,881

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

	March 31, 2020		December 31, 2019
(In thousands)
Receivables	$	59,164	$	61,365
Contract liabilities		21,518		20,143

Contract liabilities are included in payables and other long-term liabilities on the Company’s Condensed Consolidated Balance Sheet.  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, 2020 and twelve-month period ended December 31, 2019.  The difference between the opening and closing balances of the Company's contract liabilities was the result of a timing difference between the Company's performance and the customers' prepayments.

As of March 31, 2020, the Company had certain contracts with unsatisfied performance obligations.  For contracts recorded as contract liabilities, $21.5 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 $5.3 million in 2020, $2.0 million in each year from 2021 through 2025 and $6.2 million thereafter.   

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of measurement in Topic 606.  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.  Revenue from products and services transferred to customers at a single point in time accounted for 95.6% and 96.4% of net sales for the three-month periods ended March 31, 2020 and 2019, respectively.  The majority of the Company's revenue recognized at a point in time is for the sale of municipal and flow instrumentation products.  Revenue from these contracts is recognized when

13

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.

Revenue from services transferred to customers over time accounted for 4.4% and 3.6% of net sales for the three-month periods ended March 31, 2020 and 2019, respectively.   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.

Note 12   Leases

The Company rents facilities, equipment and vehicles under operating leases, some of which contain renewal options.  Upon inception of a rent agreement, the Company determines whether the arrangement contains a lease based on the unique conditions present. Leases that have a term over a year are recognized on the balance sheet as right-of-use assets and lease liabilities. Right-of-use assets are included in prepaid expenses and other current assets and other assets on the Company’s consolidated condensed balance sheets. Lease liabilities are included in other current liabilities and other long-term liabilities on the Company’s consolidated condensed balance sheet.   Information regarding the Company's right-of-use assets and the corresponding lease liabilities are as follows:

	March 31, 2020		December 31, 2019
(In thousands)
Right-of-use assets	$	7,692	$	8,411
Lease liabilities		8,085		8,792

The Company’s operating lease agreements have lease and non-lease components that require payments for common area maintenance, property taxes and insurance. The Company has elected to account for both lease and non-lease components as one lease component.  The fixed and in-substance fixed consideration in the Company’s rent agreements constitute operating lease expense that is included in the capitalized right-of-use assets and lease liabilities. The variable and short-term lease expense payments are not included in the present value of the right-of use-assets and lease liabilities on the consolidated condensed balance sheet. The Company’s rent expense is as follows:

	Three months ended March 31,
	2020		2019
(In thousands)
Operating lease expense	$	765	$	801
Variable and short-term lease expense		57		72
Rent expense	$	822	$	873

The Company records right-of-use assets and lease liabilities based upon the present value of lease payments over the expected lease term. The Company’s lease agreements typically do not have implicit interest rates that are readily determinable. As a result, the Company utilizes an incremental borrowing rate that would be incurred to borrow on a collateralized basis over a similar term in a comparable economic environment. As of March 31, 2020 and December 31, 2019, the remaining lease term on the Company’s leases was 4.4 years and 4.5 years, respectively.  As of March 31, 2020 and December 31, 2019, the discount rate was 5.0%.  The future minimum lease payments to be paid under operating leases are as follows:

	March 31, 2020
(In thousands)
2020 (remaining nine months)	$	2,073
2021		2,253
2022		1,278
2023		1,198
2024		1,165
Thereafter		1,015
Total future lease payments		8,982
Present value adjustment		(897	)
Present value of future lease payments	$	8,085

14

Item 2  Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS DESCRIPTION AND OVERVIEW

Badger Meter is an innovator in flow measurement, control and related communication solutions, serving water utilities, municipalities, and commercial and industrial customers worldwide.  The Company’s products measure water, oil, chemicals and other fluids, and are known for accuracy, long-lasting durability and for providing valuable and timely measurement data through various methods.  The Company’s product lines fall into two categories: sales of water meters, radios and related technologies to municipal water utilities (municipal water) and sales of meters, valves and other products for industrial applications in water, wastewater, and other industries (flow instrumentation).  The Company estimates that nearly 90% of its products are used in water related applications.

Municipal water, the largest sales category, is comprised of either mechanical or static (ultrasonic) water meters along with the related radio and software technologies and services used by municipal water utilities as the basis for generating their water and wastewater revenues.  The largest geographic market for the Company’s municipal water products is North America, primarily the United States, because most of the Company's meters are designed and manufactured to conform to standards promulgated by the American Water Works Association.  The majority of water meters sold by the Company continue to be mechanical in nature; however, ultrasonic meters are an increasing portion of the water meters sold by the Company and in the industry due to a variety of factors, including their ability to maintain a high level of measurement accuracy over their useful life. Providing ultrasonic water meter technology, combined with advanced radio technology, provides the Company with the opportunity to sell into other geographical markets, for example the Middle East and Europe.  

The flow instrumentation product line includes meters and valves sold worldwide to measure and control fluids going through a pipe or pipeline including water, air, steam, oil, and other liquids and gases.  These products are used in a variety of industries and applications, with the Company’s primary market focus being water/wastewater; heating, ventilating and air conditioning (HVAC); oil and gas, and chemical and petrochemical.  Flow instrumentation products are generally sold to original equipment manufacturers as the primary flow measurement device within a product or system, as well as through manufacturers’ representatives.

Municipal water meters (both residential and commercial) are generally classified as either manually read meters or remotely read meters via radio technology.  A manually read meter consists of a water meter and a register that provides a visual totalized meter reading.  Meters equipped with radio technology (endpoints) receive flow measurement data from battery-powered encoder registers attached to the water meter, which is encrypted and transmitted via radio frequency to a receiver that collects and formats the data appropriately for water utility usage and billing systems.  These remotely read systems are classified as either automatic meter reading (AMR) systems, where a vehicle equipped for meter reading purposes, including a radio receiver, computer and reading software, collects the data from utilities’ meters; or advanced metering infrastructure (AMI) systems, where data is gathered utilizing a network (either fixed or cellular) of data collectors or gateway receivers that are able to receive radio data transmission from the utilities’ meters.  AMI systems eliminate the need for utility personnel to drive through service territories to collect data from the meters.  These systems provide the utilities with more frequent and diverse data from their meters at specified intervals.

The ORION branded family of radio endpoints provides water utilities with a range of industry-leading options for meter reading.  These include ORION Migratable (ME) for AMR meter reading, ORION (SE) for traditional fixed network applications, and ORION Cellular for an infrastructure-free meter reading solution.  ORION Migratable makes the migration to fixed network easier for utilities that prefer to start with mobile reading and later adopt fixed network communications, allowing utilities to choose a solution for their current needs and be positioned for their future operational changes.  ORION Cellular eliminates the need for utility-owned fixed network infrastructure, allows for gradual or full deployment, and decreases ongoing maintenance.

Critical to the water metering ecosystem is information and analytics.  The Company’s BEACON Advanced Metering Analytics (AMA) software suite improves the utilities’ visibility of their water and water usage.  BEACON AMA is a secure, cloud-hosted software suite that includes a customizable dashboard, and has the ability to establish alerts for specific conditions.  It also allows for consumer engagement tools that permit end water users (such as homeowners) to view and manage their water usage activity.  Benefits to the utility include improved customer service, increased visibility through faster leak detection, the ability to promote and quantify the effects of its water conservation efforts, and easier compliance reporting.

Water meter replacement and the adoption and deployment of new technology comprise the majority of water meter product sales, including radio products.  To a much lesser extent, housing starts also contribute to the new product sales base.  Over the last decade, there has been a growing trend in the conversion from manually read water meters to meters with radio technology.  This conversion rate is accelerating, with the Company estimating that approximately 60% of water meters installed in the United States have been converted to a radio solution technology.

15

The Company’s net sales and corresponding net earnings depend on unit volume and product mix, with the Company generally earning higher average selling prices and margins on meters equipped with radio technology, and higher margins on ultrasonic compared to mechanical meters.  The Company’s proprietary radio products (i.e. ORION), which comprise the majority of its radio sales, generally result in higher margins than remarketed, non-proprietary technology products.  The Company also sells registers and endpoints separately to customers who wish to upgrade their existing meters in the field.  

Flow instrumentation products are used in flow measurement and control applications across a broad industrial spectrum, occasionally leveraging the same technologies used in the municipal water category.  Specialized communication protocols that control the entire flow measurement process and mandatory certifications drive these markets.  The Company provides both standard and customized flow instrumentation solutions.

The industries served by the Company’s flow instrumentation products face accelerating demands to contain costs, reduce product variability, and meet ever-changing safety, regulatory and sustainability requirements.  To address these challenges, customers must reap more value from every component in their systems.  This system-wide scrutiny has heightened the focus on flow instrumentation in industrial process, manufacturing, commercial fluid, building automation and precision engineering applications where flow measurement and control are critical.

A leader in both mechanical and static (ultrasonic) flow metering technologies for industrial markets, the Company offers one of the broadest flow measurement, control and communication portfolios in the market.  This portfolio carries respected brand names including Recordall®, Hedland®, Dynasonics®, Blancett®, and Research Control®, and includes eight of the ten major flow meter technologies.  Customers rely on the Company for application-specific solutions that deliver accurate, timely and dependable flow data and control essential for product quality, cost control, safer operations, regulatory compliance and more sustainable operations.

The Company's products are sold throughout the world through employees, resellers and representatives.  Depending on the customer mix, there can be a moderate seasonal impact on sales, primarily relating to higher sales of certain municipal water products during the spring and summer months.  No single customer accounts for more than 10% of the Company's sales.

Long-Term Business Trends

Across the globe, increasing regulations and a focus on sustainability are driving companies and utilities to better manage critical resources like water, monitor their use of hazardous materials and reduce exhaust gases.  Some customers measure fluids to identify leaks and/or misappropriation for cost control or add measurement points to help automate manufacturing.  Other customers employ measurement to comply with government mandates and laws.  The Company provides flow measurement technology to measure water, oil, chemicals and other fluids, gases and steams.  This technology is critical to provide baseline usage data and to quantify reductions as customers attempt to reduce consumption.  For example, once water usage metrics are better understood, a strategy for water-use reduction can be developed with specific water-reduction initiatives targeted to those areas where it is most viable.  With the Company’s technology, customers have found costly leaks, pinpointed equipment in need of repair, and identified areas for process improvements.

Increasingly, customers in the municipal water market are interested in more frequent and diverse data collection and the use of water metering analytics to evaluate water use.  Specifically, AMI technology enables water utilities to capture readings from each meter at more frequent and variable intervals.  There are more than 50,000 water utilities in the United States and the Company estimates that approximately 60% of them have converted to a radio solution.  The Company believes it is well positioned to meet this continuing conversion trend with its comprehensive radio and software solutions.

In addition, certain water utilities are converting from mechanical to static meters.  Ultrasonic water metering maintains a high level of measurement accuracy over the life of the meter, reducing a utility’s non-revenue water.  The Company has a decade of proven reliability in the market with its ultrasonic meters and is on a path to launching its next generation of ultrasonic metering with its D-Flow technology, which the Company believes increases its competitive differentiation.  While the introduction of ultrasonic technology into North America may increase competition, it also opens up further geographic penetration opportunities for the Company as previously described.

Finally, the concept of “Smart Cities” is beginning to take hold as one avenue to affect efficient city operations, conserve resources and improve service and delivery.  Smart water solutions (“Smart Water”) are those that provide actionable information through data analytics from an interconnected and interoperable network of sensors and devices that help people and organizations efficiently use and conserve one of the world’s most precious resources.  Badger Meter is well positioned to benefit from the advancement of Smart Water applications within the Smart Cities framework.  Cities have a keen interest in Smart Water as it provides both a revenue base and conservation outcome.  Badger Meter is one of approximately a dozen firms, and the only water metering company, that participates in the AT&T Smart City Alliance.  By leveraging this alliance, the Company has been able to gain access and sell its broad smart water solutions to higher level decision makers within a city

16

such as the mayor’s office.  In addition, it allows Badger Meter to keep abreast of emerging cellular technology changes which the Company believes is the premier infrastructure-free AMI solution.

Current Business Trends – COVID-19

In December 2019, a novel coronavirus disease (“COVID-19”) was reported and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries. On March 11, 2020, the WHO characterized COVID-19 as a pandemic.

In recent weeks, we have engaged actively with the various elements of our value chain, including customers, suppliers and logistics and transportation providers to meet demands for the Company’s products and to remain informed of any challenges within the value chain. Based on information available as of the date of this report, the Company believes it will be able to deliver products to meet customer orders on a timely basis, and therefore the Company expects products will continue to be available to meet customer needs. The Company continues to monitor customer and consumer demands, and intends to adapt plans as needed to continue to drive the business and meet its obligations during the COVID-19 situation.  We have implemented remote work arrangements effective mid-March 2020, and to date, these arrangements have not materially affected our ability to maintain business operations, including the operation of financial reporting systems, internal control over financial reporting, and disclosure controls and procedures.

As a result of the COVID-19 pandemic, the Company implemented certain cost contingency actions, including travel restrictions, a hiring freeze, reductions in discretionary spending, short-term reduced work hour furloughs globally and executive salary reductions.  As a result of the reduced work hour furloughs and certain restrictions that have been mandated by governmental authorities in various regions, our facilities are currently operating at less than normal production capacity. We expect our production capacity to improve as reduced work hour furloughs and certain governmental restrictions are eased, the timing and extent of which remains unknown.  The Company is committed to effectively managing working capital and cash in order to preserve liquidity.   At March 31, 2020, the Company had approximately $70 million in cash on the balance sheet, and $125 million of revolving credit availability that provides ample capacity to fund foreseeable needs, including the quarterly dividend.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.  The CARES Act is not expected to have a material impact on the Company’s consolidated financial statements.

While we have seen a decline in orders during April, it is difficult to estimate the severity and duration of the impact of the COVID-19 pandemic on the Company’s business, financial position or results of operations. The magnitude of the impact will be determined by the duration and span of the pandemic, operational disruptions including those resulting from government actions and the overall impact on the economy.  The Company has contingency plans in place to adequately respond to a wide range of potential economic scenarios.  

Acquisition

In the first quarter of 2019, the Company made a payment of contingent acquisition consideration $1.0 million related to the May 1, 2017 acquisition of 100% of the outstanding common stock of D-Flow.  There is an additional $0.9 million of contingent acquisition consideration related to the D-Flow acquisition that are anticipated to be made in the next twelve months which is recorded in Payables on the Company’s Condensed Consolidated Balance Sheets at March 31, 2020.

Revenue and Product Mix

As the industry continues to evolve, the Company has been at the forefront of innovation across metering, radio and software technologies in order to meet its customers’ increasing expectations for accurate and actionable data.  As technologies such as ORION Cellular and BEACON AMA managed solutions have become more readily adopted, the Company’s revenue from Software as a Service (SaaS) has increased significantly, albeit from a small base, and is margin accretive.

The Company also seeks opportunities for additional revenue enhancement.  For instance, the Company has made inroads into the Middle East market with its ultrasonic meter technology and is pursuing other geographic expansion opportunities.  Additionally, the Company is periodically asked to oversee and perform field installation of its products for certain customers.  In these cases, the Company assumes the role of general contractor and either performs the installation or hires installation subcontractors and supervises their work.    

17

Results of Operations - Three Months Ended March 31, 2020

Net Sales

The Company’s net sales for the three months ended March 31, 2020 were $108.5 million compared to $104.9 million during the same period in 2019. Sales into the municipal water market were $85.7 million, an increase of 5.6% from the prior year’s $81.2 million.  The improvement was attributable to higher sales of advanced technology products including ORION Cellular LTE-M endpoints, commercial and residential E-Series® Ultrasonic water meters as well as increased SaaS revenue associated with data collection and software analytics.   Sales of products into the global flow instrumentation end markets were $22.8 million, 3.9% lower than the prior year’s $23.7 million as significantly reduced oil & gas activity was partially offset by higher sales into the HVAC market.    

Earnings

Total operating earnings for the three months ended March 31, 2020 were $16.0 million, or 14.8% of sales, compared to $14.3 million, or 13.7% of sales, in the comparable prior year quarter.  Gross margin dollars increased $2.9 million due, in part, to higher volumes and improved municipal water product mix as well as the benefit of lower year-over-year commodity costs, including the cost of brass.  Selling, engineering and administration (“SEA”) expenses were $27.3 million or 25.2% of sales compared to $26.1 million or 24.9% of sales in the comparable prior year quarter.  The increase was primarily due to higher personnel and research and development costs.  

The provision for income taxes as a percentage of earnings before income taxes for the first quarter of 2020 was 25.6% compared to 23.5% in the first quarter of 2019.  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.  

As a result of the above-mentioned items, net earnings for the three months ended March 31, 2020 were $11.9 million, or $0.41 per diluted share, compared to $10.8 million, or $0.37 per diluted share, for the same period in 2019.

LIQUIDITY AND CAPITAL RESOURCES

The main sources of liquidity for the Company are cash from operations and borrowing capacity.  In addition, depending on market conditions, the Company may access the capital markets to strengthen its capital position and to provide additional liquidity for general corporate purposes.

Primary Working Capital

The Company uses primary working capital (“PWC”) as a percentage of sales as a key metric for working capital efficiency. The Company defines this metric as the sum of Receivables and Inventories less Payables, divided by trailing twelve month net sales. The following table shows the components of our PWC (in millions):

	March 31, 2020				December 31, 2019
	$			PWC%	$			PWC%
Receivables	$	59,164		13.8%	$	61,365		14.5%
Inventories		74,430		17.4%		81,948		19.3%
Payables		(35,915	)	-8.4%		(31,523	)	-7.4%
Primary Working Capital	$	97,679		22.8%	$	111,790		26.4%

Overall, PWC declined $14.1 million compared to the previous year-end.  Receivables at March 31, 2020 declined $2.2 million due to improved collections.   Inventories declined $7.5 million, the result of inventory planning initiatives and concentrated shipments toward the end of the quarter.  Payables at March 31, 2020 were $4.4 million higher than year-end due to the timing of payments and previously negotiated payment terms extensions.

Cash Provided by Operations

Cash provided by operations in the three months of 2020 was $30.5 million compared to $17.8 million in the same period of 2019.  The increase is due primarily to effective working capital management and modestly higher net earnings year-over-year.

Capital expenditures for the first three months of 2020 were $1.9 million compared to $2.2 million in the first three months of 2019.

18

Cash and cash equivalents increased $21.5 million, to $70.4 million at March 31, 2020 due to the strong cash flow from operations, partially offset by the payment of the quarterly dividend.  At the end of the first quarter of 2020, the Company was in a net cash (cash less short-term debt) position of $66.0 million.

The Company’s financial condition remains strong.  In June 2018, the Company amended its May 2012 credit agreement with its primary lender and extended its term until September 2021. The credit agreement includes a $125.0 million line of credit that supports commercial paper (up to $70.0 million) and includes $5.0 million of a Euro line of credit.  While the facility is unsecured, there are a number of financial covenants with which the Company must comply, and the Company was in compliance as of March 31, 2020. 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, including, in light of the COVID-19 pandemic.  As future borrowing requirements would likely be fulfilled via the local commercial paper market, the Company routinely monitors the current borrowing market.  The Company had $128.2 million of unused credit lines available at March 31, 2020.

Other Matters

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 2019 and the first quarter of 2020 were not material.

See the “Special Note Regarding Forward Looking Statements” at the front of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of risks and uncertainties that could impact the Company’s financial performance and results of operations.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company’s off-balance sheet arrangements and contractual obligations are discussed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Off-Balance Sheet Arrangements” and “Contractual Obligations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and have not materially changed since that report was filed unless otherwise indicated in this Form 10-Q.

Item 3  Quantitative and Qualitative Disclosures about Market Risk

The Company’s quantitative and qualitative disclosures about market risk are included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Market Risks” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and have not materially changed since that report was filed, except related to COVID-19 as discussed in Item 2 of this Form 10-Q.

Item 4  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s management evaluated, with the participation of the Company’s Chairman, President and Chief Executive Officer and the Company’s Senior Vice President - Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the quarter ended March 31, 2020.  Based upon their evaluation of these disclosure controls and procedures, the Company’s Chairman, President and Chief Executive Officer and the Company’s Senior Vice President – Chief Financial Officer concluded that, as of the date of such evaluation, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

19

Part II – Other Information

Item 1A  Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except for the addition of the risk factor set forth below:

The global coronavirus (COVID-19) pandemic, or other global public health pandemics, could have a material adverse effect on our business, results of operations and financial condition.

Our business, results of operations and financial condition may be adversely affected if a global public health pandemic, including the current global coronavirus (COVID-19) pandemic, interferes with the ability of our employees, suppliers, and customers to perform our and their respective responsibilities and obligations relative to the conduct of our business and operations. The COVID-19 pandemic has significantly impacted economic activity and markets around the world, and it could have a material negative impact on our business and operations in numerous ways, including but not limited to those outlined below:

• The risk that we, or our employees, suppliers or customers may be prevented from conducting business activities for an indefinite period of time, including shutdowns that may be requested or mandated by governmental authorities.

• Restrictions on shipping products from certain jurisdictions where they are produced or into certain jurisdictions where customers are located.

• Inability to meet our customers’ needs and achieve cost targets due to disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements, such as raw materials or other finished product components, transportation, workforce or other manufacturing and distribution capability.

• Failure of third parties on which we rely, including our suppliers, distributors, contractors and commercial banks, to meet their obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties and may adversely impact our operations.

• Significant reductions in demand or significant volatility in demand and a global economic recession that could further reduce demand for our products, resulting from actions taken by governments, businesses, and/or the general public in an effort to limit exposure to and spreading of such infectious diseases, such as travel restrictions, quarantines, and business shutdowns or slowdowns.

• Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our operations and capital expenditures.

The extent to which the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially and adversely impacts our business, results of operations and financial condition is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained by lingering effects of the COVID-19 pandemic on our suppliers, third-party service providers, and/or customers.

20

Item 2Unregistered Sales of Equity Securities and Use of Proceeds

In February 2017, the Board of Directors authorized the repurchase of up to 400,000 shares of the Company’s Common Stock. Upon program expiration in February 2020, the Board of Directors authorized the repurchase of up to an additional 400,000 shares of the Company’s Common Stock through February 2023.  The following table provides information about the Company's purchases under these repurchase programs during the quarter ended March 31, 2020 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.

	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of a publicly announced program		Maximum number of shares that may yet be purchased under the program
January 1, 2020 - January 31, 2020		—		—		—		400,000
February 1, 2020 - February 29, 2020		—		—		—		400,000
March 1, 2020 - March 31, 2020		40,000	$	61.68		40,000		360,000
Total as of March 31, 2020		40,000				40,000		360,000

Item 6  Exhibits

EXHIBIT INDEX

Exhibit No.	Description
3	Restated By-Laws (as amended and restated as of March 30, 2020).
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Condensed Balance Sheets, (ii) the Consolidated Condensed Statements of Operations, (iii) the Consolidated Condensed Statements of Comprehensive Income, (iv) the Consolidated Condensed Statements of Cash Flows, (v) Consolidated Condensed Statements of Shareholders’ Equity (vi) Notes to Unaudited Consolidated Condensed Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

21

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BADGER METER, INC.
Dated: April 29, 2020	By	/s/ Kenneth C. Bockhorst
		Kenneth C. Bockhorst
		Chairman, President and Chief Executive Officer
	By	/s/ Robert A. Wrocklage
		Robert A. Wrocklage
		Senior Vice President – Chief Financial Officer
	By	/s/ Daniel R. Weltzien
		Daniel R. Weltzien
		Vice President – Controller

22

EX-3

RESTATED BY-LAWS

OF

BADGER METER, INC.

(As Amended and Restated as of March 30, 2020)

ARTICLE I

SHAREHOLDERS

Section 1.  Annual Meeting.  The annual meeting of the shareholders (the "Annual Meeting") shall be held on the second Saturday in April of each year, or at such other time and date as may be fixed by resolution of the Board of Directors.  In fixing a meeting date for any Annual Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of its business judgment.  At each Annual Meeting, the shareholders shall elect that number of directors equal to the number of directors in the class whose term expires at the time of such meeting.  At any such Annual Meeting, only other business properly brought before the meeting in accordance with Section 12 of Article I of these By-laws may be transacted.  If the election of directors shall not be held on the date designated herein, or fixed as herein provided, for any Annual Meeting, or any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of shareholders (a "Special Meeting") as soon thereafter as is practicable.

Section 2.  Special Meetings.

(a)A Special Meeting may be called only by (i) the Chairman, (ii) the Chief Executive Officer or (iii) the Board of Directors and shall be called by the Chief Executive Officer upon the demand, in accordance with this Section 2, of the holders of record of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting.

(b)In order that the Corporation may determine the shareholders entitled to demand a Special Meeting, the Board of Directors may fix a record date to determine the shareholders entitled to make such a demand (the "Demand Record Date").  The Demand Record Date shall not precede the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors and shall not be more than ten days after the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors. Any shareholder of record seeking to have shareholders demand a Special Meeting shall, by sending written notice to the Secretary of the Corporation by hand or by certified or registered mail, return receipt requested, request the Board of Directors to fix a Demand Record Date. The Board of Directors shall promptly, but in all events within ten days after the date on which a valid request to fix a Demand Record Date is received, adopt a resolution fixing the Demand Record Date and shall make a public announcement of such Demand Record Date.  If no Demand Record Date has been fixed by the Board of Directors within ten days after the date on which such request is received by the Secretary, the Demand Record Date shall be the 10th day after the first date on which a valid written request to set a Demand Record Date is received by the Secretary.  To be valid, such written request shall set forth the purpose or purposes for which the Special Meeting is to be held, shall be signed by one or more shareholders of record (or their duly authorized proxies or other representatives), shall bear the date of signature of each such shareholder (or proxy or other representative) and shall set forth all information about each such shareholder and about the beneficial owner or owners, if any, on whose behalf the request is made that would be required to be set forth in a shareholder's notice described in paragraph (a) (ii) of Section 12 of Article I of these By-laws.

(c)In order for a shareholder or shareholders to demand a Special Meeting, a written demand or demands for a Special Meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting must be delivered to the Corporation.  To be valid, each written demand by a shareholder for a Special Meeting shall set forth the specific purpose or purposes for which the Special Meeting is to be held

(which purpose or purposes shall be limited to the purpose or purposes set forth in the written request to set a Demand Record Date received by the Corporation pursuant to paragraph (b) of this Section 2), shall be signed by one or more persons who as of the Demand Record Date are shareholders of record (or their duly authorized proxies or other representatives), shall bear the date of signature of each such shareholder (or proxy or other representative), and shall set forth the name and address, as they appear in the Corporation's books, of each shareholder signing such demand and the class and number of shares of the Corporation which are owned of record and beneficially by each such shareholder, shall be sent to the Secretary by hand or by certified or registered mail, return receipt requested, and shall be received by the Secretary within seventy days after the Demand Record Date.

(d)The Corporation shall not be required to call a Special Meeting upon shareholder demand unless, in addition to the documents required by paragraph (c) of this Section 2, the Secretary receives a written agreement signed by each Soliciting Shareholder (as defined below), pursuant to which each Soliciting Shareholder, jointly and severally, agrees to pay the Corporation's costs of holding the Special Meeting, including the costs of preparing and mailing proxy materials for the Corporation's own solicitation, provided that if each of the resolutions introduced by any Soliciting Shareholder at such meeting is adopted, and each of the individuals nominated by or on behalf of any Soliciting Shareholder for election as a director at such meeting is elected, then the Soliciting Shareholders shall not be required to pay such costs.  For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

(i)"Affiliate" of any Person (as defined herein) shall mean any Person controlling, controlled by or under common control with such first Person.

(ii)"Participant" shall have the meaning assigned to such term in Rule 14a-11 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

(iii)"Person" shall mean any individual, firm, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity.

(iv)"Proxy" shall have the meaning assigned to such term in Rule 14a‑1 promulgated under the Exchange Act.

(v)"Solicitation" shall have the meaning assigned to such term in Rule 14a‑11 promulgated under the Exchange Act.

(vi)"Soliciting Shareholder" shall mean, with respect to any Special Meeting demanded by a shareholder or shareholders, any of the following Persons:

(A)if the number of shareholders signing the demand or demands of meeting delivered to the Corporation pursuant to paragraph (c) of this Section 2 is ten or fewer, each shareholder signing any such demand;

(B)if the number of shareholders signing the demand or demands of meeting delivered to the Corporation pursuant to paragraph (c) of this Section 2 is more than ten, each Person who either (I) was a Participant in any Solicitation of such demand or demands or (II) at the time of the delivery to the Corporation of the documents described in paragraph (c) of this Section 2 had engaged or intended to engage in any Solicitation of Proxies for use at such Special Meeting (other than a Solicitation of Proxies on behalf of the Corporation); or

(C)any Affiliate of a Soliciting Shareholder, if a majority of the directors then in office determine, reasonably and in good faith, that such Affiliate should be required to sign the written notice described in paragraph (c) of this Section 2 and/or the written agreement described in this paragraph (d) in order to prevent the purposes of this Section 2 from being evaded.

2

(e)Except as provided in the following sentence, any Special Meeting shall be held at such hour and day as may be designated by whichever of the Chief Executive Officer, the Secretary or the Board of Directors shall have called such meeting.  In the case of any Special Meeting called by the Chief Executive Officer upon the demand of shareholders (a "Demand Special Meeting"), such meeting shall be held at such hour and day as may be designated by the Board of Directors; provided, however, that the date of any Demand Special Meeting shall be not more than seventy days after the Meeting Record Date (as defined in Section 5 of Article I of these By-laws); and providedfurther that in the event that the directors then in office fail to designate an hour and date for a Demand Special Meeting within ten days after the date that valid written demands for such meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting are delivered to the Corporation (the "Delivery Date"), then such meeting shall be held at 2:00 P.M. local time on the 100th day after the Delivery Date or, if such 100th day is not a Business Day (as defined below), on the first preceding Business Day.  In fixing a meeting date for any Special Meeting, the Chief Executive Officer, the Secretary or the Board of Directors may consider such factors as he or it deems relevant within the good faith exercise of his or its business judgment, including, without limitation, the nature of the action proposed to be taken, the facts and circumstances surrounding any demand for such meeting, and any plan of the Board of Directors to call an Annual Meeting or a Special Meeting for the conduct of related business.

(f)The Corporation may engage regionally or nationally recognized independent inspectors of elections to act as an agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported written demand or demands for a Special Meeting received by the Secretary.  For the purpose of permitting the inspectors to perform such review, no purported demand shall be deemed to have been delivered to the Corporation until the earlier of (i) five Business Days following receipt by the Secretary of such purported demand and (ii) such date as the independent inspectors certify to the Corporation that the valid demands received by the Secretary represent at least 10% of all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting.  Nothing contained in this paragraph (f) shall in any way be construed to suggest or imply that the Board of Directors or any shareholder shall not be entitled to contest the validity of any demand, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto).

(g)For purposes of these By-laws, "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of Wisconsin are authorized or obligated by law or executive order to close.

Section 3.  Place of Meeting.  The Chairman, the Chief Executive Officer, the Board of Directors or the Secretary may designate any place, either within or without the State of Wisconsin, as the place of meeting for an Annual Meeting or Special Meeting, and may, in their sole discretion, determine that a virtual meeting of shareholders by means of remote communication shall be held instead of a physical meeting of shareholders. If no designation is made, the place of meeting shall be the principal office of the Corporation.  Any meeting may be adjourned to reconvene at any place designated by vote of the Board of Directors or by the Chief Executive Officer or the Secretary.

Section 4.  Notice of Meeting.  Written notice stating the date, time and place of any meeting of shareholders shall be delivered not less than ten days nor more than sixty days before the date of the meeting (unless a different time period is provided by the Wisconsin Business Corporation Law (the "WBCL") or the Articles of Incorporation), either personally or by mail, by or at the direction of the Chairman, the President or the Secretary, to each shareholder of record entitled to vote at such meeting and to such other persons as required by the WBCL.  In the event of any Demand Special Meeting, such notice of meeting shall be sent not more than thirty days after the Delivery Date.  If mailed, notice pursuant to this Section 4 shall be deemed to be effective when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock record books of the Corporation, with postage thereon prepaid.  Unless otherwise required by the WBCL or the Articles of Incorporation, a notice of an Annual Meeting need not include a description of the purpose for which the meeting is called.  In the case of any Special Meeting, (a) the notice of meeting shall describe any business that the Board of Directors shall have theretofore determined to bring before the meeting and (b) in the case of a Demand Special Meeting, the notice of meeting (i) shall

3

describe any business set forth in the statement of purpose of the demands received by the Corporation in accordance with Section 2 of Article I of these By-laws and (ii) shall contain all of the information required in the notice received by the Corporation in accordance with Section 12(b) of Article I of these By-laws.  If an Annual Meeting or Special Meeting is adjourned to a different date, time or place, the Corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new Meeting Record Date for an adjourned meeting is or must be fixed, the Corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new Meeting Record Date.

Section 5.  Fixing of Record Date.  The Board of Directors may fix in advance a date not less than ten days and not more than seventy days prior to the date of an Annual Meeting or Special Meeting as the record date for the determination of shareholders entitled to notice of, or to vote at, such meeting (the "Meeting Record Date").  In the case of any Demand Special Meeting, (i) the Meeting Record Date shall be not later than the 30th day after the Delivery Date and (ii) if the Board of Directors fails to fix the Meeting Record Date within thirty days after the Delivery Date, then the close of business on such 30th day shall be the Meeting Record Date.  The shareholders of record on the Meeting Record Date shall be the shareholders entitled to notice of and to vote at the meeting.  Except as provided by the WBCL for a court-ordered adjournment, a determination of shareholders entitled to notice of and to vote at an Annual Meeting or Special Meeting is effective for any adjournment of such meeting unless the Board of Directors fixes a new Meeting Record Date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.  The Board of Directors may also fix in advance a date as the record date for the purpose of determining shareholders entitled to take any other action or determining shareholders for any other purpose.  Such record date shall be not more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken.  The record date for determining shareholders entitled to a distribution (other than a distribution involving a purchase, redemption or other acquisition of the Corporation's shares) or a share dividend is the date on which the Board of Directors authorizes the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date.

Section 6.  Shareholders' List for Meetings.  After a Meeting Record Date has been fixed, the Corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting.  The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder.  Such list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing to the date of the meeting, at the Corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held.  A shareholder or his or her agent may, on written demand, inspect and, subject to the limitations imposed by the WBCL, copy the list, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section 6.  The Corporation shall make the shareholders' list available at the meeting and any shareholder or his or her agent or attorney may inspect the list at any time during the meeting or any adjournment thereof.  Refusal or failure to prepare or make available the shareholders' list shall not affect the validity of any action taken at a meeting of shareholders.

Section 7.  Quorum and Voting Requirements; Postponements; Adjournments.  

(a)Shares entitled to vote as a separate voting group may take action on a matter at any Annual Meeting or Special Meeting only if a quorum of those shares exists with respect to that matter.  If the Corporation has only one class of stock outstanding, such class shall constitute a separate voting group for purposes of this Section 7.  Except as otherwise provided in the Articles of Incorporation or the WBCL, a majority of the votes entitled to be cast on the matter shall constitute a quorum of the voting group for action on that matter.  Once a share is represented for any purpose at any Annual Meeting or Special Meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new Meeting Record Date is or must be set for the adjourned meeting.  If a quorum exists, except in the case of the election of directors, action on a matter shall be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation or the WBCL requires a greater number of affirmative votes.  Unless otherwise provided in the Articles of Incorporation, each director to be elected shall be elected by a plurality of the votes

4

cast by the shares entitled to vote in the election of directors at an Annual Meeting or Special Meeting at which a quorum is present.  

(b)The Board of Directors acting by resolution may postpone and reschedule any previously scheduled Annual Meeting or Special Meeting; provided, however, that a Demand Special Meeting shall not be postponed beyond the 100th day following the Delivery Date.  Any Annual Meeting or Special Meeting may be adjourned from time to time, whether or not there is a quorum, (i) at any time, upon a resolution by shareholders if the votes cast in favor of such resolution by the holders of shares of each voting group entitled to vote on any matter theretofore properly brought before the meeting exceed the number of votes cast against such resolution by the holders of shares of each such voting group or (ii) at any time prior to the transaction of any business at such meeting, by the President or pursuant to a resolution of the Board of Directors.  No notice of the time and place of adjourned meetings need be given except as required by the WBCL.  At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

Section 8.  Voting of Shares.  Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at an Annual Meeting or Special Meeting, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the WBCL or the Articles of Incorporation.

Section 9.  Proxies.  At any Annual Meeting or Special Meeting, a shareholder may vote his or her shares in person or by proxy.  A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his or her attorney‑in‑fact.  An appointment of a proxy is effective when received by the Secretary or other officer or agent of the Corporation authorized to tabulate votes.  An appointment is valid for eleven months from the date of its signing unless a different period is expressly provided in the appointment form.  Unless otherwise provided, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting.  The presence of a shareholder who has filed his or her appointment of proxy shall not itself constitute a revocation.  The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiently of proxies.

Section 10.  Acceptance of Instruments Showing Shareholder Action.  If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the Corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of a shareholder.  If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder, the Corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if any of the following apply:

(a)  The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity.

(b)  The name purports to be that of a personal representative, administrator, executor, guardian or conservator representing the shareholder and, if the Corporation requests, evidence of fiduciary status acceptable to the Corporation is presented with respect to the vote, consent, waiver or proxy appointment.

(c)  The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the Corporation requests, evidence of this status acceptable to the Corporation is presented with respect to the vote, consent, waiver or proxy appointment.

(d)  The name signed purports to be that of a pledgee, beneficial owner, or attorney‑in‑fact of the shareholder and, if the Corporation requests, evidence acceptable to the Corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment.

5

(e)  Two or more persons are the shareholders as co‑tenants or fiduciaries and the name signed purports to be the name of at least one of the co‑owners and the person signing appears to be acting on behalf of all co‑owners.

The Corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the Corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder.

Section 11.  Waiver of Notice.  A shareholder may waive any notice required by the WBCL, the Articles of Incorporation or these By-laws before or after the date and time stated in the notice.  The waiver shall be in writing and signed by the shareholder entitled to the notice, contain the same information that would have been required in the notice under applicable provisions of the WBCL (except that the time and place of meeting need not be stated) and be delivered to the Corporation for inclusion in the corporate records.  A shareholder's attendance at any Annual Meeting or Special Meeting, in person or by proxy, waives objection to all of the following:  (a) lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

Section 12.  Notice of Shareholder Business and Nomination of Directors.

(a)Annual Meetings.

(i)Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an Annual Meeting (A) pursuant to the Corporation's notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this By-law and who is entitled to vote at the meeting and complies with the notice procedures set forth in this Section 12.

(ii)For nominations or other business to be properly brought before an Annual Meeting by a shareholder pursuant to clause (C) of paragraph (a)(i) of this Section 12, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation.  To be timely, a shareholder's notice shall be received by the Secretary of the Corporation at the principal offices of the Corporation not less than sixty days nor more than ninety days prior to the second Saturday in the month of April; provided, however, that in the event that the date of the Annual Meeting is advanced by more than thirty days or delayed by more than sixty days from the second Saturday in the month of April, notice by the shareholder to be timely must be so received not earlier than the 90th day prior to the date of such Annual Meeting and not later than the close of business on the later of (x) the 60th day prior to such Annual Meeting and (y) the 10th day following the day on which public announcement of the date of such meeting is first made.  Such shareholder's notice shall be signed by the shareholder of record who intends to make the nomination or introduce the other business (or his duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (A) the name and address, as they appear on this corporation's books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination or proposal is made; (B) the class and number of shares of the Corporation which are beneficially owned by such shareholder or beneficial owner or owners; (C) a representation that such shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination or introduce the other business specified in the notice; (D) in the case of any proposed nomination for election or re-election as a director, (I) the name and residence address of the person or persons to be nominated, (II) a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder, (III) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Exchange Act, including any

6

information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors and (IV) the written consent of each nominee to be named in a proxy statement and to serve as a director of the Corporation if so elected; and (E) in the case of any other business that such shareholder proposes to bring before the meeting, (I) a brief description of the business desired to be brought before the meeting and, if such business includes a proposal to amend these By-laws, the language of the proposed amendment, (II) such shareholder's and beneficial owner's or owners' reasons for conducting such business at the meeting and (III) any material interest in such business of such shareholder and beneficial owner or owners.

(iii)Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Section 12 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least seventy days prior to the second Saturday in the month of April, a shareholder's notice required by this Section 12 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary at the principal offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

(b)Special Meetings.  Only such business shall be conducted at a Special Meeting as shall have been described in the notice of meeting sent to shareholders pursuant to Section 4 of Article I of these By-laws.  Nominations of persons for election to the Board of Directors may be made at a Special Meeting at which directors are to be elected pursuant to such notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the Corporation who (A) is a shareholder of record at the time of giving of such notice of meeting, (B) is entitled to vote at the meeting and (C) complies with the notice procedures set forth in this Section 12.  Any shareholder desiring to nominate persons for election to the Board of Directors at such a Special Meeting shall cause a written notice to be received by the Secretary of the Corporation at the principal offices of the Corporation not earlier than ninety days prior to such Special Meeting and not later than the close of business on the later of (x) the 60th day prior to such Special Meeting and (y) the 10th day following the day on which public announcement is first made of the date of such Special Meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  Such written notice shall be signed by the shareholder of record who intends to make the nomination (or his duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (A) the name and address, as they appear on the Corporation's books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination is made; (B) the class and number of shares of the Corporation which are beneficially owned by such shareholder or beneficial owner or owners; (C) a representation that such shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination specified in the notice; (D) the name and residence address of the person or persons to be nominated; (E) a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be madeby such shareholder; (F) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Exchange Act, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors; and (G) the written consent of each nominee to be named in a proxy statement and to serve as a director of the Corporation if so elected.

(c)General.

(i)Only persons who are nominated in accordance with the procedures set forth in this Section 12 shall be eligible to serve as directors.  Only such business shall be conducted at an Annual Meeting or Special Meeting as shall have been brought before such meeting in accordance with the procedures set forth in this Section 12.  The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 12 and, if any

7

proposed nomination or business is not in compliance with this Section 12, to declare that such defective proposal shall be disregarded.

(ii)For purposes of this Section 12, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(iii)Notwithstanding the foregoing provisions of this Section 12, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 12.  Nothing in this Section 12 shall be deemed to limit the Corporation's obligation to include shareholder proposals in its proxy statement if such inclusion is required by Rule 14a-8 under the Exchange Act.

ARTICLE II

BOARD OF DIRECTORS

Section 1.  General Powers and Number.  All corporate powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under, the direction of its Board of Directors, which shall consist of not less than six (6) nor more than eleven (11) directors, the exact number of which shall be fixed from time to time by resolution of the Board of Directors.  The Board of Directors shall elect one of its members as Chairman, who, when present, shall preside at all meetings of the shareholders and Board of Directors.

Section 2.  Tenure and Qualifications.  Each director shall hold office until the annual meeting of shareholders at which his term expires and until his successor shall have been elected, or until his prior death, resignation or removal. A director shall not be eligible to stand for re-election at any annual meeting of shareholders following his 72^nd birthday.  A director may resign at any time by delivering written notice which complies with the Wisconsin Business Corporation Law to the Board of Directors, to the Chairman of the Board, if any, or to the Corporation.  A director's resignation is effective when such notice is delivered unless the notice specifies a later date.  Directors need not be residents of the State of Wisconsin or shareholders of the Corporation.

Section 3.  Certain Director Resignations.

(a)In an uncontested election of directors, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election (a “Majority Withheld Vote”) will promptly tender his or her resignation to the Chairman of the Board following certification of the shareholder vote. For purposes of these By-laws, a contested election is one in which the Chairman of the Board determines that, as of the Determination Date, the number of persons properly nominated to serve as directors of the corporation exceeds the number of directors to be elected. The “Determination Date” is (i) the day after the meeting of the Board of Directors at which the nominees for director of the Board of Directors for such election are approved, when such meeting occurs after the last day on which a shareholder may propose the nomination of a director for election in such election pursuant to the articles of incorporation or these By-laws, or (ii) the day after the last day on which a shareholder may propose the nomination of a director for election in such election pursuant to the articles of incorporation or these By-laws, when the last day for such a proposal occurs after the meeting of the Board of Directors at which the nominees for director of the Board of Directors for such election are approved, whichever of clause (i) or (ii) is applicable.

(b)The Resignation Committee (as defined in Section 3(e)) will promptly consider the resignation submitted by a director receiving a Majority Withheld Vote, and the Resignation Committee will recommend to the Board of Directors whether to accept the tendered resignation or reject it. In considering

8

whether to recommend that the Board of Directors accept or reject the tendered resignation, the Resignation Committee will consider all factors deemed relevant by the members of such committee, including, without limitation, any stated reasons why shareholders “withheld” votes for election from such director and the qualifications of the director whose resignation has been tendered.

(c)The Board of Directors will act on the Resignation Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. In considering such committee’s recommendation, the Board of Directors will consider the factors considered by such committee and such additional information and factors the Board of Directors believes to be relevant. Following the Board of Directors’ decision, the corporation will promptly publicly disclose in a Current Report on Form 8-K filed with or furnished to, as applicable, the Securities and Exchange Commission the Board of Directors’ decision whether to accept the resignation as tendered, including an explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation.

(d)Any director who tenders a resignation pursuant to this Section 3 will not participate in the recommendation of the Resignation Committee regarding whether or not to accept that director’s tendered resignation. Any director who tenders a resignation pursuant to this Section 3 will not participate in the Board of Directors’ deliberation or vote regarding whether or not to accept that director’s tendered resignation. If directors constituting a quorum of the Board of Directors did not receive a Majority Withheld Vote in the election that prompted one or more directors to tender the resignations upon which the Resignation Committee and the Board of Directors must then act, but not all of the directors received Majority Withheld Votes, then no director who tendered a resignation pursuant to this Section 3 in connection with such election will participate in the Board of Directors’ deliberation or vote (i) regarding whether or not to accept any tendered resignations related to such election or (ii) regarding matters relating to the Resignation Committee as it relates to such resignation.

(e)The “Resignation Committee” shall be (i) the Corporate Governance Committee of the Board of Directors, or such other committee of the Board of Directors then in effect performing a similar function, if (A) less than a majority of the members of such committee received Majority Withheld Votes in the election that prompted one or more directors to tender the resignations upon which the Resignation Committee must then act or (B) all of the directors received Majority Withheld Votes in such election or (ii) a committee of the Board of Directors appointed by the Board of Directors and consisting only of directors who did not receive Majority Withheld Votes, if a majority of the members of the Corporate Governance Committee of the Board of Directors, or such other committee of the Board of Directors then in effect performing a similar function, but not all of the directors, received Majority Withheld Votes at such election.

(f)These By-laws will be summarized or included in each proxy statement relating to an election of directors of the corporation.

Section 4.  Regular Meetings.  A regular meeting of the Board of Directors shall be held without other notice than this By-law immediately after, and at the same place as, the annual meeting of shareholders, and each adjourned session thereof.  The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution.

Section 5.  Special Meetings.  Special meetings of the Board of Directors may be called by or at the request of the Chairman, the Chief Executive Officer, Secretary or any two directors.  The person or persons calling any special meeting of the Board of Directors may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed, the place of meeting shall be the principal business office of the Corporation in the State of Wisconsin.

Section 6. Notice; waiver.  Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 5, Article II) shall be given by written notice delivered personally or given

9

by telegram, teletype, facsimile or other form of wire or wireless communication not less than twenty-four (24) hours prior to the meeting or mailed or delivered by private carrier not less than forty-eight (48) hours prior to the meeting to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary.  If mailed or delivered by a private carrier, such notice shall be deemed to be delivered when deposited in the United States mail or delivered to the private carrier so addressed, with postage or delivery cost thereon prepaid.  If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company.  If notice be given by teletype, facsimile or other form of wire or wireless communication, such notice shall be deemed to be delivered when evidence of its transmittal is received.  Whenever any notice whatever is required to be given to any director of the Corporation under the Articles of Incorporation or By-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice.  The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

Section 7.  Quorum.  A majority of the directors shall constitute a quorum for the transaction of business; and, except as otherwise provided by law or by the Articles of Incorporation or these By-laws, a majority of the votes cast at any meeting of the Board of Directors at which a quorum is present shall be decisive of any action.  A majority of the directors present at a meeting, though less than quorum, may adjourn the meeting from time to time without further notice.

Section 8.  Vacancies.  Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof.

Section 9.  Compensation.  The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the Corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee.  The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the Corporation.

Section 10.  Presumption of Assent.  A director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting.  Such right to dissent shall not apply to a director who voted in favor of such action.

Section 11.  Committees.  The Board of Directors by resolution adopted by the affirmative vote of a majority of the number of directors set forth in Section 1 of this Article II may designate one or more committees, each committee to consist of three or more directors elected by the Board of Directors, which shall have and may exercise, when the Board of Directors is not in session, the powers of the Board of Directors in the management of the business and affairs of the Corporation, in the committee's designated area of responsibility, except action in respect to dividends to shareholders, election of the principal officers or the filling of vacancies on the Board of Directors or committees created pursuant to this section, with respect to the approval or proposal of actions that the law requires to be approved by the shareholders,

10

amendment of the Articles of Incorporation, the adoption,  amendment or repeal of the by-laws, the approval of a plan of merger not requiring shareholder approval, the authorization or approval of the re-acquisition of shares other than according to a method prescribed by the Board of Directors, and the authorization for approval of the issuance or sale or contract for sale of shares, or the determination of the designation and relative rights, preferences and limitations of a class or series of shares, unless authorized to do so by the Board of Directors within prescribed limits.  The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the Chairman or upon request by the chairman of such meeting.  Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request.

Section 12.  Unanimous Consent Without Meeting.  Any action required or permitted by the Articles of Incorporation or By-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors then in office.

Section 13.  Telephonic Meetings.  Notwithstanding any place set forth in the notice of the meeting or these By-laws, members of the Board of Directors may participate in regular or special meetings of the Board of Directors and all Committees of the Board of Directors by or through the use of any means of communication by which all directors participating may simultaneously hear each other, such as by conference telephone; provided, however, that the Chairman of the Board or the chairman of the respective Committee and the Board or other person or persons calling a meeting may determine that the directors cannot participate by such means, in which case the notice of the meeting, or other notice to directors given prior to the meeting, shall state that each director's physical presence shall be required.  If a meeting is conducted through the use of such means of communication, then at the commencement of such meeting all participating directors shall be informed that a meeting is taking place at which official business may be transacted.  A director participating in a meeting by such means shall be deemed present in person at such meeting.

ARTICLE III

OFFICERS

Section 1.  General Officers.  The general officers of the Corporation shall be the Chief Executive Officer, the President, one or more Vice Presidents, a Secretary, a Treasurer, a Controller, and one or more Assistant Secretaries and one or more Assistant Treasurers, each of whom shall be elected annually by the Board of Directors and shall hold office until his or her successor shall have been duly elected and qualified.  The Chief Executive Officer of the Corporation shall exercise general supervision of the business and affairs of the Corporation subject to the directives of the Board of Directors.  Further, each general officer shall have such powers and duties as generally pertain to his or her respective office; provided, that such powers and duties may from time to time be modified, enlarged, restricted or augmented by the Board of Directors.

Section 2.  Additional Officers.  The Board of Directors may appoint such additional corporate officers as it may deem necessary, each of whom shall have such powers and duties as from time to time may be conferred by the Board of Directors, and shall serve for such terms as the Board may fix.

Section 3.  Removal of Officers.  Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment, the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section 4.  Vacancies.  A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term.  

11

The resignation of an officer by the delivery of written notice to the Chief Executive Officer or Secretary of the Corporation is effective upon delivery of the notice, unless the notice specifies a later date and the Corporation accepts the later date.

ARTICLE IV

SPECIAL CORPORATE ACTS

Section 1.  Voting of Securities Owned by This Corporation.  Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the Chairman of this Corporation if he be present, or in his absence by the President or any Vice President of this Corporation who may be present, and (b) whenever, in the judgment of the Chairman, or in his absence, of the President or any Vice President, it is desirable for this Corporation to execute a proxy or give a shareholder's consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the Chairman, or the President or one of the Vice Presidents of this Corporation without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer.  Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the share or shares of stock issued by such other corporation and owned by this Corporation the same as such share or shares might be voted by this Corporation.

Section 2.  Contracts.  The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined to specific instances.  In the absence of other designation, all deeds, mortgages, and instruments of assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the Chairman or the President or one of the Vice Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers.

ARTICLE V

CERTIFICATES FOR SHARES AND THEIR TRANSFER

Section 1.  Certificates for Shares; Shares Without Certificates.  Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors.  Such certificates shall be signed by the Chairman or the President or a Vice President and by the Secretary or an Assistant Secretary.  All certificates for shares shall be consecutively numbered or otherwise identified.  The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation.  All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6 of this Article V.  Shares of the Corporation may also be issued, without certificates to the full extent such issuance is allowed by the Wisconsin Business Corporation Law and the listing standards of the New York Stock Exchange (or any applicable stock exchange on which the shares are listed).  To the extent required by the Wisconsin Business Corporation Law, within a reasonable time after the issuance or transfer of shares without a certificate, the Corporation shall send to the registered owner thereof a written notice that shall set forth (a) the name of the Corporation; (b) that the Corporation is organized under the laws of the State of Wisconsin; (c) the name of the shareholder; (d) the number and class (and the designation of the series, if any) of the shares represented; (e) if applicable, a summary of

12

the designations, relative rights, preferences and limitations applicable to each class, and, if applicable, the variations in rights, preferences and limitations determined for each series and the authority of the Board of Directors to determine variations for future series (or a conspicuous statement that upon written request the Corporation will furnish the shareholder with this information without charge); and (f) if applicable, any restrictions on the transfer or registration of such shares of stock imposed by the Articles of Incorporation of the Corporation, as amended from time to time, these By-laws, any agreement among shareholders or any agreement between shareholders and the Corporation.

Section 2.  Facsimile Signatures and Seal.  The seal of the corporation on any certificates for shares may be a facsimile.  The signatures of the Chairman or President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation.

Section 3.  Signature by Former Officers.  In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.

Section 4.  Transfer of Shares.  Prior to due presentment of shares for registration of transfer the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner.  Where shares are presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, or with respect to uncertificated shares, proper transfer instructions are received, and (b) the Corporation had no duty to inquire into adverse claims or has discharged any such duty.  The Corporation may require reasonable assurance that said endorsements or transfer instructions are genuine and effective and in compliance with such other regulations as may be prescribed under the authority of the Board of Directors.

Section 5.  Restrictions on Transfer.  The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares.

Section 6.  Lost, Destroyed or Stolen Certificates.  Where the owner claims that his certificate for shares has been lost, destroyed or wrongfully taken, then the Corporation may issue, in its discretion, a new certificate or certificates of stock or uncertificated shares in place thereof, if the owner (a) so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the Corporation a sufficient indemnity bond, and (c) satisfied such other reasonable requirements as the Board of Directors may prescribe.

Section 7.  Consideration for Shares.  The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof.  The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Corporation.  When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable by the Corporation.  No share shall be issued until such share is fully paid.

Section 8.  Stock Regulations.  The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation.

ARTICLE VI

13

CORPORATE SEAL

The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of incorporation and the words, "Corporate Seal".

ARTICLE VII

AMENDMENTS

Section 1.  By Shareholders.  These By-laws may be altered, amended, repealed, augmented and new By-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the votes represented by the shares present or represented at any annual or special meeting of the shareholders at which a quorum is in attendance.

Section 2.  By Directors.  These By-laws may also be altered, amended, repealed, augmented and new By-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no By-law adopted by the shareholders shall be amended or repealed by the Board of Directors if the By-law so adopted so provides.

Section 3.  Implied Amendments.  Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the By-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the By-laws so that the By-laws would be consistent with such action, shall be given the same effect as though the By-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.

ARTICLE VIII

INDEMNIFICATION

Section 1.01.  Certain Definitions.  All capitalized terms used in this Article VIII and not otherwise hereinafter defined in this Section 1.01 shall have the meaning set forth in Section 180.0850 of the Statute (as hereinafter defined).  The following capitalized terms (including any plural forms thereof) used in this Article VIII shall be defined as follows:

(a)"Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation.

(b)"Authority" shall mean the entity selected by the Director or Officer to determine his or her right to indemnification pursuant to Section 1.04 of this Article.

(c)"Board" shall mean the entire then elected and serving board of directors of the Corporation, including all members thereof who are Parties to the subject Proceeding or any related Proceeding.

(d)"Breach of Duty" shall mean the Director or Officer breached or failed to perform his or her duties to the Corporation and his or her breach of or failure to perform those duties is determined, in accordance with Section 1.04 of this Article, to constitute misconduct under Section 180.0851 (2) (a) 1, 2, 3 or 4 of the Statute.

14

(e)"Corporation, " as used herein and as defined in the Statute and incorporated by reference into the definitions of certain capitalized terms used herein, shall mean this Corporation, including, without limitation, any successor corporation or entity to the Corporation by way of merger, consolidation or acquisition of all or substantially all of the capital stock or assets of this Corporation.

(f)"Director or Officer" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article, it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, trustee, member of any governing or decision-making committee, employee or agent of an Affiliate shall be so serving at the request of the Corporation.

(g)"Disinterested Quorum" shall mean a quorum of the Board who are not Parties to the subject Proceeding or any related Proceeding.

(h)"Party" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article, the term "Party" shall also include any Director, Officer or employee who is or was a witness in a Proceeding at a time when he or she has not otherwise been formally named a Party thereto.

(i)"Proceeding" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article, "Proceeding" shall include all Proceedings (i) brought under (in whole or in part) the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, their respective state counterparts, and/or any rule or regulation promulgated under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which the Director or Officer is a plaintiff or petitioner because he or she is a Director or Officer, provided, however, that such Proceeding is authorized by a majority vote of a Disinterested Quorum.

(j)"Statute" shall mean Sections 180.0850 through 180.0859, inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, including any amendments thereto, but, in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than the Statute permitted or required the Corporation to provide prior to such amendment.

Section 1.02.  Mandatory Indemnification.  To the fullest extent permitted or required by the Statute, the Corporation shall indemnify a Director or Officer against all Liabilities incurred by or on behalf of such Director or Officer in connection with a Proceeding in which the Director or Officer is a Party because he or she is a Director or Officer.

Section 1.03.  Procedural Requirements.

(a)A Director or Officer who seeks indemnification under Section 1.02 of this Article shall make a written request therefor to the Corporation.  Subject to Section 1.03 (b) of this Article, within sixty days of the Corporation's receipt of such request, the Corporation shall pay or reimburse the Director or Officer for the entire amount of Liabilities incurred by the Director or Officer in connection with the subject Proceeding (net of any Expenses previously advanced pursuant to Section 1.05 of this Article).

(b)No indemnification shall be required to be paid by the Corporation pursuant to Section 1.03 (a) of this Article if, within such sixty-day period: (i) a Disinterested Quorum, by a majority vote thereof, determines that the Director or Officer requesting indemnification engaged in misconduct constituting a Breach of Duty; or (ii) a Disinterested Quorum cannot be obtained.

(c)In either case of nonpayment pursuant to Section 1.03 (b) of this Article, the Board shall immediately authorize by resolution that an Authority, as provided in Section 1.04 of this Article, determine whether the Director's or Officer's conduct constituted a Breach of Duty and, therefore, whether indemnification should be denied hereunder.

15

(d)(i) If the Board does not authorize an Authority to determine the Director's or Officer's right to indemnification hereunder within such sixty-day period and/or (ii) if indemnification of the requested amount of Liabilities is paid by the Corporation, then it shall be conclusively presumed for all purposes that a Disinterested Quorum has determined that the Director or Officer did not engage in misconduct constituting a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Corporation of the requested amount of Liabilities shall be paid to the Officer or Director immediately.

Section 1.04.  Determination of Indemnification.

(a)When the Board authorized an Authority to determine a Director's or Officer's right to indemnification pursuant to Section 1.03 of this Article, then the Director or Officer requesting indemnification shall have the absolute discretionary authority to select one of the following as such Authority:

(i)An independent legal counsel; provided, that such counsel shall be mutually selected by such Director or Officer and by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board;

(ii)A panel of three arbitrators selected from the panels of arbitrators of the American Arbitration Association in Milwaukee, Wisconsin; provided, that  (A)  one arbitrator shall be selected by such Director or Officer, the second arbitrator shall be selected by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board, and the third arbitrator shall be selected by the two previously selected arbitrators; and (B)  in all other respects, such panel shall be governed by the American Arbitration Association's then existing Commercial Arbitration Rules; or

(iii)A court pursuant to and in accordance with Section 180.0854 of the Statute.

(b)In any such determination by the selected Authority there shall exist a rebuttable presumption that the Director's or Officer's conduct did not constitute a Breach of Duty and that indemnification against the requested amount of Liabilities is required.  The burden of rebutting such a presumption by clear and convincing evidence shall be on the Corporation or such other party asserting that such indemnification should not be allowed.

(c)The Authority shall make its determination within sixty days of being selected and shall submit a written opinion of its conclusion simultaneously to both the Corporation and the Director or Officer.

(d)If the Authority determines that indemnification is required hereunder, the Corporation shall pay the entire requested amount of Liabilities (net of any Expenses previously advanced pursuant to Section 1.05 of this Article), including interest thereon at a reasonable rate, as determined by the Authority, within ten days of receipt of the Authority's opinion; provided, that, if it is determined by the Authority that a Director or Officer is entitled to indemnification as to some claims, issues or matters, but not as to other claims, issues or matters, involved in the subject Proceeding, the Corporation shall be required to pay (as set forth above) only the amount of such requested Liabilities as the Authority shall deem appropriate in light of all of the circumstances of such Proceeding.

(e)The determination by the Authority that indemnification is required hereunder shall be binding upon the Corporation regardless of any prior determination that the Director or Officer engaged in a Breach of Duty.

(f)All Expenses incurred in the determination process under this Section 1.04 by either the Corporation or the Director or Officer, including, without limitation, all Expenses of the selected Authority, shall be paid by the Corporation.

Section 1.05.  Mandatory Allowance of Expenses.

16

(a)The Corporation shall pay or reimburse, within ten days after the receipt of the Director's or Officer's written request therefor, the reasonable Expenses of the Director or Officer as such Expenses are incurred, provided the following conditions are satisfied:

(i)The Director or Officer furnishes to the Corporation an executed written certificate affirming his or her good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and

(ii)The Director or Officer furnishes to the Corporation an unsecured executed written agreement to repay any advances made under this Section 1.05 if it is ultimately determined by an Authority that he or she is not entitled to be indemnified by the Corporation for such Expenses pursuant to Section 1.04 of this Article.

(b)If the Director or Officer must repay any previously advanced Expenses pursuant to this Section 1.05, such Director or Officer shall not be required to pay interest on such amounts.

Section 1.06.  Indemnification and Allowance of Expenses of Certain Others.

(a)The Corporation shall indemnify a director or officer of an Affiliate (who is not otherwise serving as a Director or Officer) against all Liabilities, and shall advance the reasonable Expenses, incurred by such director or officer in a Proceeding to the same extent hereunder as if such director or officer incurred such Liabilities because he or she was a Director or Officer, if such director or officer is a Party thereto because he or she is or was a director or officer of the Affiliate.

(b)Except as hereinafter provided, the Corporation shall indemnify each employee of the Corporation or an Affiliate of the Corporation acting within the scope of his or her duties as such, against all Liabilities, and shall advance Reasonable Expenses, incurred by or on behalf of such employee in connection with a Proceeding in which he or she is a Party by virtue of being an employee of the Corporation or an Affiliate of the Corporation, to the same extent and in the same manner as a Director or Officer hereunder.  The foregoing provision shall not apply, and the Corporation shall not indemnify any employee, with respect to any Liability to the extent covered by insurance maintained by or on behalf of such employee (other than insurance maintained by the Corporation or an Affiliate of the Corporation).

(c)The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify against Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an authorized agent of the Corporation acting within the scope of his or her duties as such and who is not otherwise a Director or Officer.

Section 1.07.  Insurance.  The Corporation may purchase and maintain insurance on behalf of a Director, Officer and/or any individual who is or was an authorized employee or agent of the Corporation against any Liability asserted against or incurred by such individual in his or her capacity as such or arising from his or her status as such, regardless of whether the Corporation is required or permitted to indemnify against any such Liability under this Article.

Section 1.08.  Notice to the Corporation.  A Director, Officer or employee shall promptly notify the Corporation in writing when he or she has actual knowledge of a Proceeding which may result in a claim or indemnification against Liabilities or allowance of Expenses hereunder, but the failure to do so shall not relieve the Corporation of any liability to the Director, Officer or employee hereunder unless the Corporation shall have been irreparably prejudiced by such failure (as determined by an Authority).

Section 1.09.  Report to Shareholders.  In the event that the Corporation indemnifies or advances expenses to a Director or Officer in connection with a proceeding brought in the right of the Corporation, the Corporation shall report the indemnification or advance in writing to shareholders with or before the notice of the next meeting of shareholders.  The report shall be delivered to shareholders who are entitled to receive notice of the next meeting of shareholders.

17

Section 1.10.  Severability.  If any provision of this Article shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Article contravene public policy, this Article shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable.

Section 1.11.  Nonexclusivity of this Article.  The rights of a Director, Officer or employee (or any other person) granted under this Article shall not be deemed exclusive of any other rights to indemnification against Liabilities or advancement of Expenses which the Director, Officer or employee (or such other person) may be entitled to under any written agreement, Board resolution, vote of shareholders of the Corporation or otherwise, including without limitation under the Statute.  Nothing contained in this Article shall be deemed to limit the Corporation's obligations to indemnify a Director, Officer or employee under the Statute.

Section 1.12.  Contractual Nature of this Article; Repeal or Limitation of Rights.  This Article shall be deemed to be a contract between the Corporation and each Director, Officer and employee and any repeal or other limitation of this Article or any repeal or limitation of the Statute or any other applicable law shall not limit any rights of indemnification against Liabilities or allowance of Expenses then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right of indemnification against Liabilities or allowance of Expenses for Proceedings commenced after such repeal or limitation to enforce this Article with regard to acts, omissions or events arising prior to such repeal or limitation.

Section 1.13.  Subrogation Rights.  Notwithstanding any provision to the contrary set forth herein, the Corporation's obligations hereunder are not intended to constitute, and shall not constitute, a waiver of any right to subrogation which the Corporation may have against any person or entity.

18

EX-31.1

Exhibit 31.1

Certification of Chairman, President and Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)

or 15d-14(a) under the Securities Exchange Act of 1934

I, Kenneth C. Bockhorst, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Badger Meter, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	April 29, 2020	By	/s/ Kenneth C. Bockhorst
			Kenneth C. Bockhorst
			Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Senior Vice President – Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)

or 15d-14(a) under the Securities Exchange Act of 1934

I, Robert A. Wrocklage, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Badger Meter, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	April 29, 2020	By	/s/ Robert A. Wrocklage
			Robert A. Wrocklage
			Senior Vice President – Chief Financial Officer

EX-32

Exhibit 32

Written Statement of the Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. §1350

Solely for the purpose of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Badger Meter, Inc., a Wisconsin corporation (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 29, 2020	By	/s/ Kenneth C. Bockhorst
			Kenneth C. Bockhorst
			Chairman, President and Chief Executive Officer
		By	/s/ Robert A. Wrocklage
			Robert A. Wrocklage
			Senior Vice President – Chief Financial Officer

XML

Contingencies, Litigation and Commitments

3 Months Ended

Mar. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Contingencies, Litigation and Commitments

Note 6   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 2019 and the first quarter of 2020 were not material.

The Company relies on single suppliers for most brass castings, certain resins 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 would 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.

XML

Additional Financial Information Disclosures

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Additional Financial Information Disclosures

Note 2   Additional Financial Information Disclosures

The consolidated condensed balance sheet at December 31, 2019 was derived from amounts included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.  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:

	Three months ended March 31,
(In thousands)	2020			2019
Balance at beginning of period	$	5,583		$	4,206
Net additions charged to earnings		1,161			465
Costs incurred		(763	)		(353	)
Balance at end of period	$	5,981		$	4,318

XML

New Pronouncements

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

New Pronouncements

Note 10   New Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies the existing guidance to enable more consistent application. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year with early adoption being permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326),” which amends the accounting for credit losses on purchased financial assets and available-for-sale debt securities with credit deterioration. This ASU requires the measurement of all expected credit losses for financial assets, including accounts receivables, held at the reporting date based upon current conditions, historical experience and reasonable forecasts. This ASU is effective for annual reporting periods beginning after December 15, 2019. The Company adopted ASU No. 2016-13 on January 1, 2020 and noted no significant changes to the Company’s financial positions or results of operations.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 08, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Trading Symbol	BMI
Title of 12(b) Security	Common Stock
Security Exchange Name	NYSE
Entity Registrant Name	BADGER METER, INC.
Entity Central Index Key	0000009092
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		29,117,383
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-06706
Entity Incorporation, State or Country Code	WI
Entity Tax Identification Number	39-0143280
Entity Address, Address Line One	4545 W. Brown Deer Road
Entity Address, City or Town	Milwaukee
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53233
City Area Code	(414)
Local Phone Number	355-0400

XML

Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities:
Net earnings	$ 11,854	$ 10,824
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation	2,975	2,978
Amortization	3,256	3,264
Deferred income taxes	392	(1)
Noncurrent employee benefits	88	117
Stock-based compensation expense	307	265
Changes in:
Receivables	1,385	(1,943)
Inventories	7,437	166
Payables	4,517	4,540
Prepaid expenses and other current assets	(609)	(2,101)
Other liabilities	(1,064)	(294)
Total adjustments	18,684	6,991
Net cash provided by operations	30,538	17,815
Investing activities:
Property, plant and equipment expenditures	(1,942)	(2,160)
Net cash used for investing activities	(1,942)	(2,160)
Financing activities:
Net decrease in short-term debt		(7,000)
Payment of contingent acquisition consideration		(1,000)
Dividends paid	(4,938)	(4,357)
Proceeds from exercise of stock options	478	471
Repurchase of treasury stock	(2,467)	(1,873)
Issuance of treasury stock	55	52
Net cash used for financing activities	(6,872)	(13,707)
Effect of foreign exchange rates on cash	(219)	(1)
Increase in cash and cash equivalents	21,505	1,947
Cash and cash equivalents – beginning of period	48,871	13,086
Cash and cash equivalents – end of period	$ 70,376	$ 15,033

XML

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenues	$ 108,508	$ 104,881
Revenue recognized over time
Disaggregation of Revenue [Line Items]
Revenues	4,804	3,753
Revenue recognized at a point in time
Disaggregation of Revenue [Line Items]
Revenues	103,704	101,128
United States
Disaggregation of Revenue [Line Items]
Revenues	94,492	91,499
Asia
Disaggregation of Revenue [Line Items]
Revenues	1,548	1,452
Canada
Disaggregation of Revenue [Line Items]
Revenues	3,136	3,497
Europe
Disaggregation of Revenue [Line Items]
Revenues	4,775	5,352
Mexico
Disaggregation of Revenue [Line Items]
Revenues	1,970	834
Middle East
Disaggregation of Revenue [Line Items]
Revenues	1,537	1,584
Other
Disaggregation of Revenue [Line Items]
Revenues	$ 1,050	$ 663

XML

Accumulated Other Comprehensive Income (Loss) - Components of and Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from AOCI, tax	$ (1)	$ 4,000
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	331,068	303,503
Other comprehensive income (loss) before reclassifications	(627)	(257)
Amounts reclassified from accumulated other comprehensive income, net of tax	1	(12)
Net current period other comprehensive income (loss), net of tax	(626)	(269)
Balance at end of period	335,721	308,613
Unrecognized pension and postretirement benefits
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	263	360
Other comprehensive income (loss) before reclassifications	0	0
Amounts reclassified from accumulated other comprehensive income, net of tax	1	(12)
Net current period other comprehensive income (loss), net of tax	1	(12)
Balance at end of period	264	348
Foreign currency
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	162	220
Other comprehensive income (loss) before reclassifications	(627)	(257)
Amounts reclassified from accumulated other comprehensive income, net of tax	0	0
Net current period other comprehensive income (loss), net of tax	(627)	(257)
Balance at end of period	(465)	(37)
Accumulated other comprehensive income (loss)
Increase (Decrease) in Stockholders' Equity
Balance at beginning of period	425	580
Other comprehensive income (loss) before reclassifications	(627)
Balance at end of period	$ (201)	$ 311

XML

Revenue Recognition - Narrative 2 (Details) - Consolidated Sales - Product Concentration Risk	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue recognized at a point in time
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	95.60%	96.40%
Revenue recognized over time
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	4.40%	3.60%

XML

Leases - Schedule of Right-of-Use Assets and the Corresponding Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Right-of-use assets	$ 7,692	$ 8,411
Lease liabilities	$ 8,085	$ 8,792

XML

Employee Benefit Plans - Narrative (Details) - Other postretirement benefits $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Estimated other postretirement benefits to be paid in 2020	$ 400
Benefits paid	100
Settlement expense	$ 0

XML

Additional Financial Information Disclosures (Tables)

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Changes in Warranty and After-Sale Costs Reserve

Changes in the Company’s warranty and after-sale costs reserve are as follows:

	Three months ended March 31,
(In thousands)	2020			2019
Balance at beginning of period	$	5,583		$	4,206
Net additions charged to earnings		1,161			465
Costs incurred		(763	)		(353	)
Balance at end of period	$	5,981		$	4,318

XML

Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2020

Revenue From Contract With Customer [Abstract]

Disaggregation of Revenue

Information regarding revenues disaggregated by geographic area is as follows:

	Three months ended March 31,
(In thousands)	2020		2019
Revenues:
United States	$	94,492	$	91,499
Foreign:
Asia		1,548		1,452
Canada		3,136		3,497
Europe		4,775		5,352
Mexico		1,970		834
Middle East		1,537		1,584
Other		1,050		663
Total	$	108,508	$	104,881

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

	Three months ended March 31,
(In thousands)	2020		2019
Revenue recognized over time	$	4,804	$	3,753
Revenue recognized at a point in time		103,704		101,128
Total	$	108,508	$	104,881

Contract with Customer, Liability and Receivables

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

	March 31, 2020		December 31, 2019
(In thousands)
Receivables	$	59,164	$	61,365
Contract liabilities		21,518		20,143

XML

Leases - Schedule of Rent Expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases [Abstract]
Operating lease expense	$ 765	$ 801
Variable and short-term lease expense	57	72
Rent expense	$ 822	$ 873

XML

New Pronouncement - (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

New Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies the existing guidance to enable more consistent application. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year with early adoption being permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326),” which amends the accounting for credit losses on purchased financial assets and available-for-sale debt securities with credit deterioration. This ASU requires the measurement of all expected credit losses for financial assets, including accounts receivables, held at the reporting date based upon current conditions, historical experience and reasonable forecasts. This ASU is effective for annual reporting periods beginning after December 15, 2019. The Company adopted ASU No. 2016-13 on January 1, 2020 and noted no significant changes to the Company’s financial positions or results of operations.

XML

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Earnings Before Incomes Taxes, Income Tax Expense and Effective Income Tax Rate

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

	Three months ended March 31,
(In thousands)	2020			2019
Earnings before income taxes	$	15,940		$	14,151
Income tax expense		4,086			3,327
Effective income tax rate		25.6	%		23.5	%

XML

Employee Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Defined pension plan benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost – benefits earned during the year	$ 13	$ 37
Interest cost on projected benefit obligations	2	10
Amortization of net loss (benefit)	1	9
Net periodic benefit cost	16	56
Other postretirement benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost – benefits earned during the year	31	29
Interest cost on projected benefit obligations	41	53
Amortization of net loss (benefit)	0	(25)
Net periodic benefit cost	$ 72	$ 57

XML

Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement Of Income And Comprehensive Income [Abstract]
Net earnings	$ 11,854	$ 10,824
Other comprehensive income:
Foreign currency translation adjustments	(627)	(257)
Pension and postretirement benefits, net of tax	1	(12)
Comprehensive income	$ 11,228	$ 10,555

XML

Acquisitions

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Acquisitions

Note 5   Acquisition

             In the first quarter of 2019, the Company made a payment of contingent acquisition consideration of $1.0 million related to the May 1, 2017 acquisition of 100% of the outstanding common stock of D-Flow Technology AB (“D-Flow”).  There is an additional $0.9 million of contingent acquisition consideration outstanding related to the D-Flow acquisition that are anticipated to be made in the next twelve months which is recorded in Payables on the Company’s Consolidated Condensed Balance Sheet at March 31, 2020.

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

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, 2020 and December 31, 2019, results of operations, comprehensive income, cash flows and statements of shareholders’ equity for the three-month periods ended March 31, 2020 and 2019.  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.

XML

Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 9   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.

XML

Leases - Narrative (Details)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Operating leases, practical expedient	true
Operating leases, remaining lease term	4 years 4 months 24 days	4 years 6 months
Operating leases, discount rate	5.00%	5.00%

XML

Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Revenue From Contract With Customer [Abstract]
Receivables	$ 59,164	$ 61,365
Contract liabilities	$ 21,518	$ 20,143

XML

Accumulated Other Comprehensive Income (Loss) - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Amortization of pension and postretirement benefits items:
Prior service benefit/cost	[1]		$ (25)
Actuarial loss (1)	[1]		9
Total before tax			(16)
Income tax			4
Amount reclassified out of accumulated other comprehensive loss		$ 1	$ (12)

[1] These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost in Note 3 “Employee Benefit Plans”

XML

Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Components of Net Periodic Benefit Cost

The following table sets forth the components of net periodic benefit cost for the three months ended March 31, 2020 and 2019 based on December 31, 2019 and 2018 actuarial measurement dates, respectively:

	Defined pension plan benefits				Other postretirement benefits
(In thousands)	2020		2019		2020		2019
Service cost – benefits earned during the year	$	13	$	37	$	31	$	29
Interest cost on projected benefit obligations		2		10		41		53
Amortization of net loss (benefit)		1		9		-		(25	)
Net periodic benefit cost	$	16	$	56	$	72	$	57

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Schedule of Right-of-Use Assets and the Corresponding Lease Liabilities

Information regarding the Company's right-of-use assets and the corresponding lease liabilities are as follows:

	March 31, 2020		December 31, 2019
(In thousands)
Right-of-use assets	$	7,692	$	8,411
Lease liabilities		8,085		8,792

Schedule of Rent Expenses

The Company’s rent expense is as follows:

	Three months ended March 31,
	2020		2019
(In thousands)
Operating lease expense	$	765	$	801
Variable and short-term lease expense		57		72
Rent expense	$	822	$	873

Schedule of Future Minimum Lease Payments to be Paid under Operating Leases

The future minimum lease payments to be paid under operating leases are as follows:

	March 31, 2020
(In thousands)
2020 (remaining nine months)	$	2,073
2021		2,253
2022		1,278
2023		1,198
2024		1,165
Thereafter		1,015
Total future lease payments		8,982
Present value adjustment		(897	)
Present value of future lease payments	$	8,085

XML

Revenue Recognition - Narrative 1 (Details 1) $ in Millions	Mar. 31, 2020 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 21.5
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 5.3
Expected timing of performance obligation satisfaction, period	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.0
Expected timing of performance obligation satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.0
Expected timing of performance obligation satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.0
Expected timing of performance obligation satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.0
Expected timing of performance obligation satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.0
Expected timing of performance obligation satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 6.2
Expected timing of performance obligation satisfaction, period	1 year

XML

Income Taxes - Schedule of Earnings Before Incomes Taxes, Income Tax Expense and Effective Income Tax Rate (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Earnings before income taxes	$ 15,940	$ 14,151
Income tax expense	$ 4,086	$ 3,327
Effective income tax rate	25.60%	23.50%

XML

Consolidated Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 70,376	$ 48,871
Receivables	59,164	61,365
Inventories:
Finished goods	19,469	22,946
Work in process	16,776	17,728
Raw materials	38,185	41,274
Total inventories	74,430	81,948
Prepaid expenses and other current assets	7,459	7,910
Total current assets	211,429	200,094
Property, plant and equipment, at cost	211,457	209,825
Less accumulated depreciation	(126,887)	(124,064)
Net property, plant and equipment	84,570	85,761
Intangible assets, at cost less accumulated amortization	46,396	48,163
Other assets	15,288	15,875
Deferred income taxes	2,015	742
Goodwill	71,258	71,258
Total assets	430,956	421,893
Current liabilities:
Short-term debt	4,400	4,480
Payables	35,915	31,523
Accrued compensation and employee benefits	9,181	12,754
Warranty and after-sale costs	5,981	5,583
Other current liabilities	4,979	2,907
Total current liabilities	60,456	57,247
Other long-term liabilities	23,093	22,980
Deferred income taxes	2,428	876
Accrued non-pension postretirement benefits	5,721	5,711
Other accrued employee benefits	3,537	4,011
Commitments and contingencies (Note 6)
Shareholders’ equity:
Common stock	37,220	37,200
Capital in excess of par value	42,690	41,956
Reinvested earnings	292,785	285,879
Accumulated other comprehensive (loss) income	(201)	425
Less: Employee benefit stock	(154)	(154)
Treasury stock, at cost	(36,619)	(34,238)
Total shareholders’ equity	335,721	331,068
Total liabilities and shareholders’ equity	$ 430,956	$ 421,893

XML

Revenue Recognition

3 Months Ended

Mar. 31, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

Note 11   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 municipal water and flow instrumentation products, such as flow meters and radios, 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.

In accordance with ASU No. 2016-10 “Revenue from Contracts with Customers” (“Topic 606”), 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 meets the disclosure objective in Topic 606 which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

Information regarding revenues disaggregated by geographic area is as follows:

	Three months ended March 31,
(In thousands)	2020		2019
Revenues:
United States	$	94,492	$	91,499
Foreign:
Asia		1,548		1,452
Canada		3,136		3,497
Europe		4,775		5,352
Mexico		1,970		834
Middle East		1,537		1,584
Other		1,050		663
Total	$	108,508	$	104,881

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

	Three months ended March 31,
(In thousands)	2020		2019
Revenue recognized over time	$	4,804	$	3,753
Revenue recognized at a point in time		103,704		101,128
Total	$	108,508	$	104,881

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

	March 31, 2020		December 31, 2019
(In thousands)
Receivables	$	59,164	$	61,365
Contract liabilities		21,518		20,143

Contract liabilities are included in payables and other long-term liabilities on the Company’s Condensed Consolidated Balance Sheet.  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, 2020 and twelve-month period ended December 31, 2019.  The difference between the opening and closing balances of the Company's contract liabilities was the result of a timing difference between the Company's performance and the customers' prepayments.

As of March 31, 2020, the Company had certain contracts with unsatisfied performance obligations.  For contracts recorded as contract liabilities, $21.5 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 $5.3 million in 2020, $2.0 million in each year from 2021 through 2025 and $6.2 million thereafter.   

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of measurement in Topic 606.  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.  Revenue from products and services transferred to customers at a single point in time accounted for 95.6% and 96.4% of net sales for the three-month periods ended March 31, 2020 and 2019, respectively.  The majority of the Company's revenue recognized at a point in time is for the sale of municipal 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.

Revenue from services transferred to customers over time accounted for 4.4% and 3.6% of net sales for the three-month periods ended March 31, 2020 and 2019, respectively.   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.

XML

Consolidated Condensed Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock at $1 par value	[1]	Capital in excess of par value	Reinvested earnings	Accumulated other comprehensive income (loss)	Employee benefit stock	Treasury stock (at cost)
Balance at beginning of period at Dec. 31, 2018	$ 303,503	$ 37,198		$ 38,082	$ 257,313	$ 580	$ (306)	$ (29,364)
Net earnings	10,824				10,824
Pension and postretirement benefits (net of tax effect)	(12)					(12)
Foreign currency translation	(257)					(257)
Cash dividends	(4,360)				(4,360)
Stock options exercised	471	2		397				72
Stock-based compensation	265			265
Purchase of common stock for treasury stock	(1,873)							(1,873)
Issuance of treasury stock	52			12				40
Balance at end of period at Mar. 31, 2019	308,613	37,200		38,756	263,777	311	(306)	(31,125)
Balance at beginning of period at Dec. 31, 2019	331,068	37,200		41,956	285,879	425	(154)	(34,238)
Net earnings	11,854				11,854
Pension and postretirement benefits (net of tax effect)	1					1
Foreign currency translation	(627)					(627)
Cash dividends	(4,948)				(4,948)
Stock options exercised	478	20		438				20
Stock-based compensation	307			307
Purchase of common stock for treasury stock	(2,467)							(2,467)
Issuance of treasury stock	55			(11)				66
Balance at end of period at Mar. 31, 2020	$ 335,721	$ 37,220		$ 42,690	$ 292,785	$ (201)	$ (154)	$ (36,619)

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

XML

Employee Benefit Plans

3 Months Ended

Mar. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

Note 3   Employee Benefit Plans

The Company maintains supplemental non-qualified plans for certain officers and other key employees, and an Employee Savings and Stock Ownership Plan for the majority of the U.S. employees.

The Company additionally has a postretirement healthcare benefit plan that provides medical benefits for certain U.S. retirees and eligible dependents hired prior to November 1, 2004.  Employees are eligible to receive postretirement healthcare benefits upon meeting certain age and service requirements.  No employees hired after October 31, 2004 are eligible to receive these benefits.  This plan requires employee contributions to offset benefit costs.

The following table sets forth the components of net periodic benefit cost for the three months ended March 31, 2020 and 2019 based on December 31, 2019 and 2018 actuarial measurement dates, respectively:

	Defined pension plan benefits				Other postretirement benefits
(In thousands)	2020		2019		2020		2019
Service cost – benefits earned during the year	$	13	$	37	$	31	$	29
Interest cost on projected benefit obligations		2		10		41		53
Amortization of net loss (benefit)		1		9		-		(25	)
Net periodic benefit cost	$	16	$	56	$	72	$	57

The Company disclosed in its financial statements for the year ended December 31, 2019 that it estimated it would pay $0.4 million in other postretirement benefits in 2020 based on actuarial estimates.  As of March 31, 2020, $0.1 million of such benefits have been paid.  The Company continues to believe that its estimated payments for the full year are reasonable.  However, such estimates contain inherent uncertainties because cash payments can vary significantly depending on the timing of postretirement medical claims and the collection of the retirees’ portion of certain costs.  The amount of benefits paid in calendar year 2020 will not impact the expense for postretirement benefits for 2020.

XML

Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 7   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, income tax expense and effective income tax rate are as follows:

	Three months ended March 31,
(In thousands)	2020			2019
Earnings before income taxes	$	15,940		$	14,151
Income tax expense		4,086			3,327
Effective income tax rate		25.6	%		23.5	%

XML

Revenue Recognition - Narrative 1 (Details) $ in Millions	Mar. 31, 2020 USD ($)
Revenue From Contract With Customer [Abstract]
Revenue, remaining performance obligation	$ 21.5

XML

Acquisitions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2020
Business Acquisition
Payment of contingent acquisition consideration	$ 1,000
D-Flow
Business Acquisition
Payment of contingent acquisition consideration	$ 1,000
Outstanding common stock acquired (as a percent)		100.00%
Contingent payments		$ 900

XML

Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 4   Accumulated Other Comprehensive Income (Loss)

Components of and changes in accumulated other comprehensive income (loss) at March 31, 2020 are as follows:

(In thousands)	Unrecognized pension and postretirement benefits		Foreign currency			Total
Balance at beginning of period	$	263	$	162		$	425
Other comprehensive (loss) before reclassifications		-		(627	)		(627	)
Amounts reclassified from accumulated other comprehensive income, net of tax of ($1)		1		-			1
Net current period other comprehensive income (loss), net of tax		1		(627	)		(626	)
Accumulated other comprehensive income (loss)	$	264	$	(465	)	$	(201	)

Details of reclassifications out of accumulated other comprehensive income (loss) during the three months ended March 31, 2020 are immaterial.     

Components of and changes in accumulated other comprehensive income (loss) at March 31, 2019 are as follows:

(In thousands)	Unrecognized pension and postretirement benefits			Foreign currency			Total
Balance at beginning of period	$	360		$	220		$	580
Other comprehensive income (loss) before reclassifications		-			(257	)		(257	)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $4		(12	)		-			(12	)
Net current period other comprehensive income (loss), net of tax		(12	)		(257	)		(269	)
Accumulated other comprehensive (loss) income	$	348		$	(37	)	$	311

Details of reclassifications out of accumulated other comprehensive income (loss) during the three months ended March 31, 2019 are as follows:

(In thousands)	Amount reclassified from accumulated other comprehensive income (loss)
Amortization of pension and postretirement benefits items:
Prior service benefit (1)	$	(25	)
Actuarial loss (1)		9
Total before tax		(16	)
Income tax		4
Amount reclassified out of accumulated other comprehensive loss	$	(12	)

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost in Note 3 “Employee Benefit Plans”

XML

Fair Value Measurements of Financial Instruments

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements of Financial Instruments

Note 8   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.  Short-term debt is comprised of notes payable drawn against the Company's lines of credit and commercial paper.  Because of its short-term nature, the carrying amount of the short-term debt also approximates fair value.  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.

XML

Consolidated Condensed Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 108,508	$ 104,881
Cost of sales	65,186	64,424
Gross margin	43,322	40,457
Selling, engineering and administration	27,307	26,130
Operating earnings	16,015	14,327
Interest expense, net	31	129
Other pension and postretirement costs	44	47
Earnings before income taxes	15,940	14,151
Provision for income taxes	4,086	3,327
Net earnings	$ 11,854	$ 10,824
Earnings per share:
Basic	$ 0.41	$ 0.37
Diluted	0.41	0.37
Dividends declared per common share	$ 0.17	$ 0.15
Shares used in computation of earnings per share:
Basic	29,042,158	29,028,964
Impact of dilutive securities	181,757	209,660
Diluted	29,223,915	29,238,624

XML

Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Note 12   Leases

The Company rents facilities, equipment and vehicles under operating leases, some of which contain renewal options.  Upon inception of a rent agreement, the Company determines whether the arrangement contains a lease based on the unique conditions present. Leases that have a term over a year are recognized on the balance sheet as right-of-use assets and lease liabilities. Right-of-use assets are included in prepaid expenses and other current assets and other assets on the Company’s consolidated condensed balance sheets. Lease liabilities are included in other current liabilities and other long-term liabilities on the Company’s consolidated condensed balance sheet.   Information regarding the Company's right-of-use assets and the corresponding lease liabilities are as follows:

	March 31, 2020		December 31, 2019
(In thousands)
Right-of-use assets	$	7,692	$	8,411
Lease liabilities		8,085		8,792

The Company’s operating lease agreements have lease and non-lease components that require payments for common area maintenance, property taxes and insurance. The Company has elected to account for both lease and non-lease components as one lease component.  The fixed and in-substance fixed consideration in the Company’s rent agreements constitute operating lease expense that is included in the capitalized right-of-use assets and lease liabilities. The variable and short-term lease expense payments are not included in the present value of the right-of use-assets and lease liabilities on the consolidated condensed balance sheet. The Company’s rent expense is as follows:

	Three months ended March 31,
	2020		2019
(In thousands)
Operating lease expense	$	765	$	801
Variable and short-term lease expense		57		72
Rent expense	$	822	$	873

The Company records right-of-use assets and lease liabilities based upon the present value of lease payments over the expected lease term. The Company’s lease agreements typically do not have implicit interest rates that are readily determinable. As a result, the Company utilizes an incremental borrowing rate that would be incurred to borrow on a collateralized basis over a similar term in a comparable economic environment. As of March 31, 2020 and December 31, 2019, the remaining lease term on the Company’s leases was 4.4 years and 4.5 years, respectively.  As of March 31, 2020 and December 31, 2019, the discount rate was 5.0%.  The future minimum lease payments to be paid under operating leases are as follows:

	March 31, 2020
(In thousands)
2020 (remaining nine months)	$	2,073
2021		2,253
2022		1,278
2023		1,198
2024		1,165
Thereafter		1,015
Total future lease payments		8,982
Present value adjustment		(897	)
Present value of future lease payments	$	8,085

XML

Consolidated Condensed Statements of Shareholders' Equity (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement Of Stockholders Equity [Abstract]
Tax effect on employee benefit funded status adjustment	$ (1)	$ 4
Cash dividends (in dollars per share)	$ 0.17	$ 0.15
Issuance of treasury stock (in shares)	15	9

XML

Leases - Schedule of Future Minimum Lease Payments to be Paid under Operating Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
2020 (remaining nine months)	$ 2,073
2021	2,253
2022	1,278
2023	1,198
2024	1,165
Thereafter	1,015
Total future lease payments	8,982
Present value adjustment	(897)
Present value of future lease payments	$ 8,085	$ 8,792

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Components of and Changes in Accumulated Other Comprehensive Income (Loss)

Components of and changes in accumulated other comprehensive income (loss) at March 31, 2020 are as follows:

(In thousands)	Unrecognized pension and postretirement benefits		Foreign currency			Total
Balance at beginning of period	$	263	$	162		$	425
Other comprehensive (loss) before reclassifications		-		(627	)		(627	)
Amounts reclassified from accumulated other comprehensive income, net of tax of ($1)		1		-			1
Net current period other comprehensive income (loss), net of tax		1		(627	)		(626	)
Accumulated other comprehensive income (loss)	$	264	$	(465	)	$	(201	)

Components of and changes in accumulated other comprehensive income (loss) at March 31, 2019 are as follows:

(In thousands)	Unrecognized pension and postretirement benefits			Foreign currency			Total
Balance at beginning of period	$	360		$	220		$	580
Other comprehensive income (loss) before reclassifications		-			(257	)		(257	)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $4		(12	)		-			(12	)
Net current period other comprehensive income (loss), net of tax		(12	)		(257	)		(269	)
Accumulated other comprehensive (loss) income	$	348		$	(37	)	$	311

Reclassifications Out of Accumulated Other Comprehensive Loss

Details of reclassifications out of accumulated other comprehensive income (loss) during the three months ended March 31, 2019 are as follows:

(In thousands)	Amount reclassified from accumulated other comprehensive income (loss)
Amortization of pension and postretirement benefits items:
Prior service benefit (1)	$	(25	)
Actuarial loss (1)		9
Total before tax		(16	)
Income tax		4
Amount reclassified out of accumulated other comprehensive loss	$	(12	)

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost in Note 3 “Employee Benefit Plans”

XML

Additional Financial Information Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Changes in warranty and after-sale costs reserve
Balance at beginning of period	$ 5,583	$ 4,206
Net additions charged to earnings	1,161	465
Costs incurred	(763)	(353)
Balance at end of period	$ 5,981	$ 4,318