0001564590-20-034687.txt : 20200730 0001564590-20-034687.hdr.sgml : 20200730 20200730175553 ACCESSION NUMBER: 0001564590-20-034687 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 58 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200730 DATE AS OF CHANGE: 20200730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BADGER METER INC CENTRAL INDEX KEY: 0000009092 STANDARD INDUSTRIAL CLASSIFICATION: TOTALIZING FLUID METERS & COUNTING DEVICES [3824] IRS NUMBER: 390143280 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06706 FILM NUMBER: 201060500 BUSINESS ADDRESS: STREET 1: 4545 WEST BROWN DEER ROAD CITY: MILWAUKEE STATE: WI ZIP: 53223 BUSINESS PHONE: 4143715702 MAIL ADDRESS: STREET 1: 4545 W BROWN DEER RD CITY: MILWAUKEE STATE: WI ZIP: 53223 FORMER COMPANY: FORMER CONFORMED NAME: BADGER METER MANUFACTURING CO DATE OF NAME CHANGE: 19710729 10-Q 1 bmi-10q_20200630.htm 10-Q bmi-10q_20200630.htm
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

 

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

For the quarterly period ended June 30, 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 July 13, 2020, there were 29,117,539 shares of Common stock outstanding with a par value of $1 per share.

 

 

 


Table of Contents

BADGER METER, INC.

Quarterly Report on Form 10-Q for the Period Ended June 30, 2020

Index

 

 

Page No.

 

 

Part I. Financial Information:

 

 

 

 

Item 1

Financial Statements (unaudited):

4

 

 

 

 

Consolidated Condensed Balance Sheets - June 30, 2020 and December 31, 2019

4

 

 

 

 

Consolidated Condensed Statements of Operations - Three and Six Months Ended June 30, 2020 and 2019

5

 

 

 

 

Consolidated Condensed Statements of Comprehensive Income - Three and Six Months Ended June 30, 2020 and 2019

6

 

 

 

 

Consolidated Condensed Statements of Cash Flows - Six Months Ended June 30, 2020 and 2019

7

 

 

 

 

Consolidated Condensed Statements of Shareholders’ Equity – Three and Six Months Ended June 30, 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

20

 

 

 

Item 4

Controls and Procedures

20

 

 

Part II. Other Information:

 

 

 

 

Item 1A

Risk Factors

21

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

22

 

 

 

Item 6

Exhibits

22

 

 

Signatures

23

 

2


Table of Contents

Special Note Regarding Forward Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, as well as other information provided from time to time by Badger Meter, Inc. (the “Company” or “Badger Meter”) or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those 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


Table of Contents

Part I – Financial Information

Item 1  Financial Statements

BADGER METER, INC.

Consolidated Condensed Balance Sheets

 

  

 

June 30,

 

 

December 31,

 

 

 

(Unaudited)

 

 

 

 

 

 

 

(In thousands)

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

85,201

 

 

$

48,871

 

Receivables

 

 

54,021

 

 

 

61,365

 

Inventories:

 

 

 

 

 

 

 

 

Finished goods

 

 

20,093

 

 

 

22,946

 

Work in process

 

 

16,375

 

 

 

17,728

 

Raw materials

 

 

40,378

 

 

 

41,274

 

Total inventories

 

 

76,846

 

 

 

81,948

 

Prepaid expenses and other current assets

 

 

7,339

 

 

 

7,910

 

Total current assets

 

 

223,407

 

 

 

200,094

 

Property, plant and equipment, at cost

 

 

212,846

 

 

 

209,825

 

Less accumulated depreciation

 

 

(129,656

)

 

 

(124,064

)

Net property, plant and equipment

 

 

83,190

 

 

 

85,761

 

Intangible assets, at cost less accumulated amortization

 

 

44,638

 

 

 

48,163

 

Other assets

 

 

15,022

 

 

 

15,875

 

Deferred income taxes

 

 

2,018

 

 

 

742

 

Goodwill

 

 

71,258

 

 

 

71,258

 

Total assets

 

$

439,533

 

 

$

421,893

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Short-term debt

 

$

4,480

 

 

$

4,480

 

Payables

 

 

35,449

 

 

 

31,523

 

Accrued compensation and employee benefits

 

 

9,678

 

 

 

12,754

 

Warranty and after-sale costs

 

 

6,421

 

 

 

5,583

 

Other current liabilities

 

 

6,673

 

 

 

2,907

 

Total current liabilities

 

 

62,701

 

 

 

57,247

 

Other long-term liabilities

 

 

23,639

 

 

 

22,980

 

Deferred income taxes

 

 

2,555

 

 

 

876

 

Accrued non-pension postretirement benefits

 

 

5,643

 

 

 

5,711

 

Other accrued employee benefits

 

 

3,852

 

 

 

4,011

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

37,220

 

 

 

37,200

 

Capital in excess of par value

 

 

43,456

 

 

 

41,956

 

Reinvested earnings

 

 

297,370

 

 

 

285,879

 

Accumulated other comprehensive income

 

 

245

 

 

 

425

 

Less: Employee benefit stock

 

 

(154

)

 

 

(154

)

    Treasury stock, at cost

 

 

(36,994

)

 

 

(34,238

)

Total shareholders’ equity

 

 

341,143

 

 

 

331,068

 

Total liabilities and shareholders’ equity

 

$

439,533

 

 

$

421,893

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

4


Table of Contents

BADGER METER, INC.

Consolidated Condensed Statements of Operations

 

  

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

(In thousands except share and per share amounts)

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

$

91,119

 

 

$

103,542

 

 

$

199,627

 

 

$

208,423

 

Cost of sales

 

 

55,269

 

 

 

63,266

 

 

 

120,455

 

 

 

127,690

 

Gross margin

 

 

35,850

 

 

 

40,276

 

 

 

79,172

 

 

 

80,733

 

Selling, engineering and administration

 

 

23,186

 

 

 

25,243

 

 

 

50,493

 

 

 

51,373

 

Operating earnings

 

 

12,664

 

 

 

15,033

 

 

 

28,679

 

 

 

29,360

 

Interest expense, net

 

 

32

 

 

 

85

 

 

 

63

 

 

 

214

 

Other pension and postretirement costs

 

 

44

 

 

 

35

 

 

 

88

 

 

 

82

 

Earnings before income taxes

 

 

12,588

 

 

 

14,913

 

 

 

28,528

 

 

 

29,064

 

Provision for income taxes

 

 

3,054

 

 

 

3,555

 

 

 

7,140

 

 

 

6,882

 

Net earnings

 

$

9,534

 

 

$

11,358

 

 

$

21,388

 

 

$

22,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.33

 

 

$

0.39

 

 

$

0.74

 

 

$

0.76

 

Diluted

 

$

0.33

 

 

$

0.39

 

 

$

0.73

 

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.17

 

 

$

0.15

 

 

$

0.34

 

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computation of earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

29,047,297

 

 

 

29,027,887

 

 

 

29,046,277

 

 

 

29,024,543

 

Impact of dilutive securities

 

 

218,422

 

 

 

183,646

 

 

 

200,090

 

 

 

200,009

 

Diluted

 

 

29,265,719

 

 

 

29,211,533

 

 

 

29,246,367

 

 

 

29,224,552

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

5


Table of Contents

BADGER METER, INC.

Consolidated Condensed Statements of Comprehensive Income

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

(In thousands)

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net earnings

 

$

9,534

 

 

$

11,358

 

 

$

21,388

 

 

$

22,182

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

445

 

 

 

395

 

 

 

(182

)

 

 

137

 

Pension and postretirement benefits, net of tax

 

 

1

 

 

 

360

 

 

 

2

 

 

 

349

 

Comprehensive income

 

$

9,980

 

 

$

12,113

 

 

$

21,208

 

 

$

22,668

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

6


Table of Contents

BADGER METER, INC.

Consolidated Condensed Statements of Cash Flows

 

 

 

Six Months Ended

June 30,

 

 

 

(Unaudited)

(In thousands)

 

 

 

2020

 

 

2019

 

Operating activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

21,388

 

 

$

22,182

 

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

 

 

 

 

 

 

 

 

Depreciation

 

 

5,978

 

 

 

6,063

 

Amortization

 

 

6,483

 

 

 

6,297

 

Deferred income taxes

 

 

392

 

 

 

(15

)

Noncurrent employee benefits

 

 

457

 

 

 

(267

)

Stock-based compensation expense

 

 

705

 

 

 

554

 

Changes in:

 

 

 

 

 

 

 

 

Receivables

 

 

6,638

 

 

 

6,028

 

Inventories

 

 

5,070

 

 

 

(2,565

)

Payables

 

 

3,886

 

 

 

9,141

 

Prepaid expenses and other assets

 

 

(1,600

)

 

 

(3,946

)

Other current liabilities

 

 

2,889

 

 

 

(2,569

)

Total adjustments

 

 

30,898

 

 

 

18,721

 

Net cash provided by operations

 

 

52,286

 

 

 

40,903

 

Investing activities:

 

 

 

 

 

 

 

 

Property, plant and equipment expenditures

 

 

(3,579

)

 

 

(4,466

)

Net cash used for investing activities

 

 

(3,579

)

 

 

(4,466

)

Financing activities:

 

 

 

 

 

 

 

 

Net decrease in short-term debt

 

 

-

 

 

 

(13,500

)

Payment of contingent acquisition consideration

 

 

-

 

 

 

(1,650

)

Dividends paid

 

 

(9,878

)

 

 

(8,717

)

Proceeds from exercise of stock options

 

 

478

 

 

 

748

 

Repurchase of treasury stock

 

 

(2,873

)

 

 

(2,837

)

Issuance of treasury stock

 

 

93

 

 

 

97

 

Net cash used for financing activities

 

 

(12,180

)

 

 

(25,859

)

Effect of foreign exchange rates on cash

 

 

(197

)

 

 

230

 

Increase in cash and cash equivalents

 

 

36,330

 

 

 

10,808

 

Cash and cash equivalents – beginning of period

 

 

48,871

 

 

 

13,086

 

Cash and cash equivalents – end of period

 

$

85,201

 

 

$

23,894

 

 

See accompanying notes to unaudited consolidated condensed financial statements.

7


Table of Contents

BADGER METER, INC.

Consolidated Condensed Statements of Shareholders’ Equity

 

 

 

Quarter and year-to-date ended June 30,

 

 

 

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, March 31, 2019

 

$

37,200

 

 

$

38,756

 

 

$

263,777

 

 

$

311

 

 

$

(306

)

 

$

(31,125

)

 

$

308,613

 

Net earnings

 

 

-

 

 

 

-

 

 

 

11,358

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,358

 

Pension and postretirement benefits

   (net of ($141) tax effect)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

360

 

 

 

-

 

 

 

-

 

 

 

360

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

395

 

 

 

-

 

 

 

-

 

 

 

395

 

Cash dividends of $0.15 per share

 

 

-

 

 

 

-

 

 

 

(4,363

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,363

)

Stock options exercised

 

 

-

 

 

 

243

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

34

 

 

 

277

 

Stock-based compensation

 

 

-

 

 

 

289

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

289

 

Purchase of common stock for treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(964

)

 

 

(964

)

Issuance of treasury stock (19 shares)

 

 

-

 

 

 

458

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

29

 

 

 

487

 

Balance, June 30, 2019

 

$

37,200

 

 

$

39,746

 

 

$

270,772

 

 

$

1,066

 

 

$

(306

)

 

$

(32,026

)

 

$

316,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

$

37,198

 

 

$

38,082

 

 

$

257,313

 

 

$

580

 

 

$

(306

)

 

$

(29,364

)

 

$

303,503

 

Net earnings

 

 

-

 

 

 

-

 

 

 

22,182

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

22,182

 

Pension and postretirement benefits

   (net of ($137) tax effect)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

349

 

 

 

-

 

 

 

-

 

 

 

349

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

137

 

 

 

-

 

 

 

-

 

 

 

137

 

Cash dividends of $0.30 per share

 

 

-

 

 

 

-

 

 

 

(8,723

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,723

)

Stock options exercised

 

 

2

 

 

 

640

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

106

 

 

 

748

 

Stock-based compensation

 

 

-

 

 

 

554

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

554

 

Purchase of common stock for treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,837

)

 

 

(2,837

)

Issuance of treasury stock (28 shares)

 

 

-

 

 

 

470

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

69

 

 

 

539

 

Balance, June 30, 2019

 

$

37,200

 

 

$

39,746

 

 

$

270,772

 

 

$

1,066

 

 

$

(306

)

 

$

(32,026

)

 

$

316,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

 

$

37,220

 

 

$

42,690

 

 

$

292,785

 

 

$

(201

)

 

$

(154

)

 

$

(36,619

)

 

$

335,721

 

Net earnings

 

 

-

 

 

 

-

 

 

 

9,534

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,534

 

Pension and postretirement benefits

   (net of ($1) tax effect)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

1

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

445

 

 

 

-

 

 

 

-

 

 

 

445

 

Cash dividends of $0.17 per share

 

 

-

 

 

 

-

 

 

 

(4,949

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,949

)

Stock-based compensation

 

 

-

 

 

 

398

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

398

 

Purchase of common stock for treasury stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-