UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, ~~D.C.~~DC 20549

~~___________________________________________________~~

FORM 10-Q

~~___________________________________________________~~

~~Quarterly Report Pursuant to Section~~

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

~~for~~

For the quarterly period ended September 30, ~~2017~~

2023

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

For the transition period fromto

Commission File ~~Number~~ No. 001-06706

BADGER METER, INC.

~~___________________________________________________~~

~~4545 W. Brown Deer Road~~

~~Milwaukee, Wisconsin 53223~~

(~~Address~~Exact name of ~~principal executive offices)~~

~~(414) 355-0400~~

~~(Registrant's telephone number, including area code)~~

~~A Wisconsin Corporation~~

~~IRS Employer Identification No. 39-0143280~~

~~___________________________________________________~~

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. Yesý ☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yesý ☒ 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”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company,”~~company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule ~~12b-2~~12b‑2 of the Exchange Act.



Large accelerated filer	☒	ý	~~Accelerated filer~~	¨

~~Non-accelerated filer~~		o ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	¨ ☐
Accelerated filer	☐
Emerging growth company	☐
Non‑accelerated filer	o ☐

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 ý

☒

As of October 11, ~~2017,~~2023 there were ~~29,112,432~~29,346,874 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 September 30, ~~2017~~

2023

Index



		Page No.

Part I. Financial Information:

Item 1	Financial Statements (unaudited):	4

	Consolidated Condensed Balance Sheets - September 30, ~~2017~~2023 and December 31, ~~2016~~2022	4

	Consolidated Condensed Statements of Operations - Three and Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	5

	Consolidated Condensed Statements of Comprehensive Income - Three and Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	6

	Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	7

	Consolidated Condensed Statements of Shareholders’ Equity – Three and Nine Months Ended September 30, 2023 and 2022	8

	Notes to Unaudited Consolidated Condensed Financial Statements	8 9

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3	Quantitative and Qualitative Disclosures about Market Risk	20 19

Item 4	Controls and Procedures	20 19

Part II. Other Information:

Item 61A	~~Exhibits~~Risk Factors	21 20

~~Signatures~~ Item 2	22Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 5	Other Information	20

Item 6	Exhibits	20

Signatures		21

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~~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~~Company's then current views and assumptions and involve risks and uncertainties. ~~Some~~See Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for further information regarding 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, 2016 that include, among other things:~~

the continued shift in the Company’s business from lower cost, manually read meters toward more expensive, value-added automatic meter reading (AMR) systems, advanced metering infrastructure (AMI) systems and advanced metering analytics (AMA) systems that offer more comprehensive solutionsstatements. The Company disclaims any obligation to ~~customers’ metering needs;~~

~~the success~~publicly update or ~~failure of newer Company products;~~

changes in competitive pricing and bids in both the domestic and foreign marketplaces, and particularly in continued intense price competition on government bid contracts for lower cost, manually read meters;

~~the actions (or lack thereof) of the Company’s competitors;~~

changes in the Company’s relationships with its alliance partners, primarily its alliance partners that provide radio solutions, and particularly those that sell products that do or may compete with the Company’s products;

changes in the general health of the United States and foreign economies, including to some extent such things as the length and severity of global economic downturns, international or civil conflicts that affect international trade, the ability of municipal water utility customers to authorize and finance purchases of the Company’s products, the Company’s ability to obtain financing, housing starts in the United States, and overall industrial activity;

~~unusual weather, weather patterns or other natural phenomena, including related economic and other ancillary effects of~~revise any ~~such events;~~

~~economic policy changes, including but not limited to, trade policy and corporate taxation;~~

~~the timing and impact of government funding programs that stimulate national and global economies, as well as the impact of government budget cuts or partial shutdowns of governmental operations;~~

~~changes in the cost and/or availability of needed raw materials and parts, such as volatility in the cost of brass castings~~forward-looking statements as a result of fluctuations in commodity prices, particularly for copper and scrap metal at the supplier level, foreign-sourced electronic components as a result of currency exchange fluctuations and/or lead times, and plastic resin as a result of changes in petroleum and natural gas prices;

~~the Company’s ability to successfully integrate acquired businesses or products;~~

~~changes in foreign economic conditions, particularly currency fluctuations in the United States dollar, the Euro and the Mexican peso;~~

~~the inability to develop technologically advanced products;~~

~~the failure of the Company’s products to operate as intended;~~

~~the inability to protect the Company’s proprietary rights to its products;~~

the Company’s expanded role as a prime contractor for providing complete technology systems to governmental entities, which brings with it added risks, including but not limited to, the Company’s responsibility for subcontractor performance, additional costs and expenses if the Company and its subcontractors fail to meet the timetable agreed to with the governmental entity, and the Company’s expanded warranty and performance obligations;

~~disruptions and other damages to~~new information, ~~technology and other networks and operations due to breaches in data security~~future events or any other ~~cybersecurity attack;~~

~~transportation delays or interruptions;~~

~~violations or alleged violations~~reason.

Table of the U.S. Foreign Corrupt Practices Act (FCPA) or other anti-corruption laws and the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act (referred to as FATCA);

~~the loss of certain single-source suppliers; and~~

~~changes in laws and regulations, particularly laws dealing with the content or handling of materials used in the Company's products.~~

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.

Contents

Part I – Financial Information

Item 1 Financial Statements

BADGER METER, INC.

Consolidated Condensed Balance Sheets

September 30, December 31,
(Unaudited)
(In thousands)
Assets 2017 2016
Current assets:
Cash $ 13,394
$ 7,338
Receivables 68,884
59,818
Inventories:
Finished goods 21,954
18,087
Work in process 17,700
17,157
Raw materials 37,356
42,457
Total inventories 77,010
77,701
Prepaid expenses and other current assets 3,968
6,155
Total current assets 163,256
151,012
Property, plant and equipment, at cost 210,489
200,978
Less accumulated depreciation (117,347 ) (110,784 )
Net property, plant and equipment 93,142
90,194
Intangible assets, at cost less accumulated amortization 57,835
51,872
Other assets 10,704
6,607
Deferred income taxes —
700
Goodwill 61,156
49,314
Total assets $ 386,093
$ 349,699

Liabilities and shareholders’ equity
Current liabilities:
Short-term debt $ 44,970
$ 37,950
Payables 27,136
18,350
Accrued compensation and employee benefits 13,779
13,861
Warranty and after-sale costs 3,413
2,779
Income and other taxes 3,196
2,898
Total current liabilities 92,494
75,838
Other long-term liabilities 5,795
4,019
Deferred income taxes 1,618
1,901
Accrued non-pension postretirement benefits 5,853
5,753
Other accrued employee benefits 6,203
5,979
Commitments and contingencies (Note 6)

Shareholders’ equity:
Common stock 37,163
37,122
Capital in excess of par value 30,757
28,022
Reinvested earnings 240,764
223,876
Accumulated other comprehensive loss (9,856 ) (11,635 )
Less: Employee benefit stock (614 ) (614 )
Treasury stock, at cost (24,084 ) (20,562 )
Total shareholders’ equity 274,130
256,209
Total liabilities and shareholders’ equity $ 386,093
$ 349,699


	September 30,			December 31,
	(Unaudited)
	(In thousands)
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	162,910		$	138,052
Receivables		89,063			76,651
Inventories:
Finished goods		34,910			31,350
Work in process		35,940			23,577
Raw materials		76,938			64,929
Total inventories		147,788			119,856
Prepaid expenses and other current assets		23,191			13,273
Total current assets		422,952			347,832
Property, plant and equipment, at cost		227,998			220,945
Less accumulated depreciation		(153,559	)		(147,403	)
Net property, plant and equipment		74,439			73,542
Intangible assets, at cost less accumulated amortization		54,634			53,607
Other assets		12,225			14,048
Deferred income taxes		12,809			12,757
Goodwill		112,698			101,261
Total assets	$	689,757		$	603,047
Liabilities and shareholders’ equity
Current liabilities:
Payables	$	84,997		$	71,440
Accrued compensation and employee benefits		25,502			20,513
Warranty and after-sale costs		10,820			9,606
Other current liabilities		7,463			8,753
Total current liabilities		128,782			110,312
Other long-term liabilities		53,131			37,808
Deferred income taxes		6,441			4,648
Accrued non-pension postretirement benefits		3,647			3,917
Other accrued employee benefits		5,050			3,940
Commitments and contingencies (Note 5)
Shareholders’ equity:
Common stock: $1 par; authorized 80,000,000 and 40,000,000 shares in 2023 and 2022, respectively; issued 37,221,098 shares in 2023 and 2022		37,221			37,221
Capital in excess of par value		57,962			53,282
Reinvested earnings		441,922			395,155
Accumulated other comprehensive loss		(7,399	)		(5,983	)
Less: Treasury stock, at cost, 7,874,224 shares in 2023 and 7,928,071 shares in 2022		(37,000	)		(37,253	)
Total shareholders’ equity		492,706			442,422
Total liabilities and shareholders’ equity	$	689,757		$	603,047

See accompanying notes to unaudited consolidated condensed financial statements.

BADGER METER, INC.

Consolidated Condensed Statements of Operations

Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
(In thousands except share and per share amounts)

2017 2016 2017 2016
Net sales $ 100,008
$ 96,273
$ 305,790
$ 300,663
Cost of sales 62,969
57,626
189,047
183,609
Gross margin 37,039
38,647
116,743
117,054
Selling, engineering and administration 24,628
24,705
74,272
75,384
Operating earnings 12,411
13,942
42,471
41,670
Interest expense, net 242
213
567
711
Earnings before income taxes 12,169
13,729
41,904
40,959
Provision for income taxes 4,194
4,937
14,566
14,777
Net earnings $ 7,975
$ 8,792
$ 27,338
$ 26,182

Earnings per share:
Basic $ 0.28
$ 0.30
$ 0.94
$ 0.91
Diluted $ 0.27
$ 0.30
$ 0.94
$ 0.90

Dividends declared per common share $ 0.130
$ 0.115
$ 0.360
$ 0.315

Shares used in computation of earnings per share:
Basic 28,939,292
28,898,526
28,939,940
28,879,307
Impact of dilutive securities 178,756
162,306
173,468
160,500
Diluted 29,118,048
29,060,832
29,113,408
29,039,807


	Three Months Ended September 30,						Nine Months Ended September 30,
	(Unaudited)						(Unaudited)
	(In thousands except share and per share amounts)
	2023			2022			2023			2022

Net sales	$	186,193		$	148,009		$	521,152		$	418,244
Cost of sales		113,470			90,487			316,179			255,239
Gross margin		72,723			57,522			204,973			163,005
Selling, engineering and administration		41,301			33,651			119,003			98,184
Operating earnings		31,422			23,871			85,970			64,821
Interest income, net		(1,200	)		(108	)		(2,649	)		(86	)
Other pension and postretirement costs		32			32			97			97
Earnings before income taxes		32,590			23,947			88,522			64,810
Provision for income taxes		6,621			6,014			20,645			15,853
Net earnings	$	25,969		$	17,933		$	67,877		$	48,957

Earnings per share:
Basic	$	0.89		$	0.61		$	2.32		$	1.68
Diluted	$	0.88		$	0.61		$	2.30		$	1.67

Dividends declared per common share	$	0.27		$	0.23		$	0.72		$	0.63

Shares used in computation of earnings per share:
Basic		29,294,886			29,215,982			29,275,445			29,211,488
Impact of dilutive securities		178,488			156,482			173,030			151,609
Diluted		29,473,374			29,372,464			29,448,475			29,363,097

See accompanying notes to unaudited consolidated condensed financial statements.

BADGER METER, INC.

Consolidated Condensed Statements of Comprehensive Income

Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
(In thousands)
2017 2016 2017 2016
Net earnings $ 7,975
$ 8,792
$ 27,338
$ 26,182
Other comprehensive income:
Foreign currency translation adjustment 310
106
1,650
395
Pension and postretirement benefits, net of tax (25 ) 401
129
591
Comprehensive income $ 8,260
$ 9,299
$ 29,117
$ 27,168


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	(Unaudited)						(Unaudited)
	(In thousands)
	2023			2022			2023			2022
Net earnings	$	25,969		$	17,933		$	67,877		$	48,957
Other comprehensive loss:
Foreign currency translation adjustments		(3,158	)		(5,424	)		(1,313	)		(13,104	)
Pension and postretirement benefits, net of tax		(38	)		(16	)		(103	)		(16	)
Comprehensive income	$	22,773		$	12,493		$	66,461		$	35,837

See accompanying notes to unaudited consolidated condensed financial statements.

BADGER METER, INC.

Consolidated Condensed Statements of Cash Flows

Nine Months Ended
September 30

(Unaudited)
(In thousands)
2017 2016
Operating activities:
Net earnings $ 27,338
$ 26,182
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation 9,079
8,477
Amortization 9,089
8,569
Deferred income taxes (188 ) 144
Noncurrent employee benefits (606 ) 671
Contribution to pension plan (825 ) (1,000 )
Stock-based compensation expense 1,191
1,137
Changes in:
Receivables (8,041 ) (1,276 )
Inventories 1,929
(3,499 )
Prepaid expenses and other assets (4,580 ) (236 )
Liabilities other than debt 11,543
1,014
Total adjustments 18,591
14,001
Net cash provided by operations 45,929
40,183

Investing activities:
Property, plant and equipment expenditures (11,554 ) (7,849 )
Acquisitions, net of cash acquired and future payments (18,376 ) —
Net cash used for investing activities (29,930 ) (7,849 )

Financing activities:
Net increase (decrease) in short-term debt 1,411
(21,710 )
Dividends paid (10,444 ) (9,126 )
Proceeds from exercise of stock options 1,167
509
Repurchase of treasury stock (3,677 ) —
Issuance of treasury stock 594
507
Net cash used for financing activities (10,949 ) (29,820 )

Effect of foreign exchange rates on cash 1,006
(8 )

Increase in cash 6,056
2,506
Cash – beginning of period 7,338
8,163
Cash – end of period $ 13,394
$ 10,669


	Nine Months Ended September 30,
	(Unaudited) (In thousands)
	2023			2022
Operating activities:
Net earnings	$	67,877		$	48,957
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation		8,100			8,413
Amortization		12,820			11,748
Deferred income taxes		(401	)		24
Noncurrent employee benefits		(274	)		(138	)
Stock-based compensation expense		3,963			2,170
Changes in:
Receivables		(11,855	)		(18,860	)
Inventories		(27,628	)		(16,207	)
Payables		12,282			23,870
Prepaid expenses and other assets		(7,279	)		(9,405	)
Other liabilities		14,567			2,171
Total adjustments		4,295			3,786
Net cash provided by operations		72,172			52,743
Investing activities:
Property, plant and equipment expenditures		(9,949	)		(4,690	)
Acquisitions, net of cash acquired		(17,127	)		-
Net cash used for investing activities		(27,076	)		(4,690	)
Financing activities:
Dividends paid		(21,134	)		(18,292	)
Proceeds from exercise of stock options		967			61
Repurchase of treasury stock		-			(427	)
Net cash used for financing activities		(20,167	)		(18,658	)
Effect of foreign exchange rates on cash		(71	)		(1,782	)
Increase in cash and cash equivalents		24,858			27,613
Cash and cash equivalents – beginning of period		138,052			87,174
Cash and cash equivalents – end of period	$	162,910		$	114,787

See accompanying notes to unaudited consolidated condensed financial statements.

BADGER METER, INC.

Consolidated Condensed Statements of Shareholders’ Equity


	Quarter and year-to-date ended September 30,
	Common Stock at $1 par value*		Capital in excess of par value			Reinvested earnings			Accumulated other comprehensive income (loss)			Treasury stock (at cost)			Total
	(Unaudited)
	(In thousands except share and per share amounts)
Balance, June 30, 2022	$	37,221	$	51,015		$	372,856		$	(7,544	)	$	(37,365	)	$	416,183
Net earnings		-		-			17,933			-			-			17,933
Pension and postretirement benefits (net of $(5) tax effect)		-		-			-			(16	)		-			(16	)
Foreign currency translation		-		-			-			(5,424	)		-			(5,424	)
Cash dividends of $0.23 per share		-		-			(6,582	)		-			-			(6,582	)
Stock options exercised		-		50			-			-			11			61
Stock-based compensation		-		704			-			-			-			704
Issuance of treasury stock (2 shares)		-		11			-			-			(11	)		-
Balance, September 30, 2022	$	37,221	$	51,780		$	384,207		$	(12,984	)	$	(37,365	)	$	422,859

Balance, December 31, 2021	$	37,221	$	49,224		$	353,535		$	136		$	(37,046	)	$	403,070
Net earnings		-		-			48,957			-			-			48,957
Pension and postretirement benefits (net of $(5) tax effect)		-		-			-			(16	)		-			(16	)
Foreign currency translation		-		-			-			(13,104	)		-			(13,104	)
Cash dividends of $0.63 per share		-		-			(18,285	)		-			-			(18,285	)
Stock options exercised		-		50			-			-			11			61
Stock-based compensation		-		2,170			-			-			-			2,170
Purchase of common stock for treasury stock		-		-			-			-			(427	)		(427	)
Issuance of treasury stock (28 shares)		-		336			-			-			97			433
Balance, September 30, 2022	$	37,221	$	51,780		$	384,207		$	(12,984	)	$	(37,365	)	$	422,859

Balance, June 30, 2023	$	37,221	$	55,833		$	423,877		$	(4,203	)	$	(37,136	)	$	475,592
Net earnings		-		-			25,969			-			-			25,969
Pension and postretirement benefits (net of $(5) tax effect)		-		-			-			(38	)		-			(38	)
Foreign currency translation		-		-			-			(3,158	)		-			(3,158	)
Cash dividends of $0.27 per share		-		-			(7,924	)		-			-			(7,924	)
Stock options exercised		-		774			-			-			135			909
Stock-based compensation		-		1,356			-			-			-			1,356
Issuance of treasury stock (<1 shares)		-		(1	)		-			-			1			-
Balance, September 30, 2023	$	37,221	$	57,962		$	441,922		$	(7,399	)	$	(37,000	)	$	492,706

Balance, December 31, 2022	$	37,221	$	53,282		$	395,155		$	(5,983	)	$	(37,253	)	$	442,422
Net earnings		-		-			67,877			-			-			67,877
Pension and postretirement benefits (net of $(26) tax effect)		-		-			-			(103	)		-			(103	)
Foreign currency translation		-		-			-			(1,313	)		-			(1,313	)
Cash dividends of $0.72 per share		-		-			(21,110	)		-			-			(21,110	)
Stock options exercised		-		824			-			-			143			967
Stock-based compensation		-		3,963			-			-			-			3,963
Issuance of treasury stock (24 shares)		-		(107	)		-			-			110			3
Balance, September 30, 2023	$	37,221	$	57,962		$	441,922		$	(7,399	)	$	(37,000	)	$	492,706

* 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.

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 ~~Inc. (the “Company” or “Badger Meter”)~~ contain all adjustments (consisting only of normal recurring accruals except as otherwise discussed) necessary to present fairly the ~~Company’s~~Company's consolidated condensed financial position at September 30, ~~2017,~~2023 and December 31, 2022, results of operations, comprehensive income, and statements of shareholders’ equity for the ~~three-~~three and nine-month periods ended September 30, ~~2017~~2023 and ~~2016, comprehensive income for the three- and nine-month periods ended September 30, 2017 and 2016,~~2022, and cash flows for the nine-month ~~periods~~period ended September 30, ~~2017~~2023 and ~~2016.~~2022. 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, ~~2016~~2022 was derived from amounts included in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022. Refer to the ~~footnotes~~notes to ~~the~~consolidated financial statements included in that report for a description of the ~~Company’s~~Company's accounting policies and for additional details of the ~~Company’s~~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~~Company's warranty and after-sale costs reserve are as follows:


	Three months ended						Nine months ended
	September 30,						September 30,
(In thousands)	2023			2022			2023			2022
Balance at beginning of period	$	11,045		$	10,859		$	9,606		$	12,868
Net additions charged to earnings		3,476			1,312			8,355			3,564
Costs incurred		(3,701	)		(1,802	)		(7,141	)		(6,063	)
Balance at end of period	$	10,820		$	10,369		$	10,820		$	10,369

Three months ended Nine months ended
September 30, September 30,
(In thousands) 2017 2016 2017 2016
Balance at beginning of period $ 3,064
$ 3,513
$ 2,779
$ 3,133
Net additions charged to earnings 919
666
2,902
1,904
Adjustments to pre-existing warranties 168
(255 ) 214
608
Costs incurred (738 ) (705 ) (2,482 ) (2,426 )
Balance at end of period $ 3,413
$ 3,219
$ 3,413
$ 3,219

Note 3 ~~Employee Benefit Plans~~

The Company maintains a non-contributory defined benefit pension plan that covers substantially all U.S. employees who were employed at December 31, 2011. After that date, no further benefits are being accrued in this plan. For the frozen pension plan, benefits are based primarily on years of service and, for certain individuals, levels of compensation.

The Company also maintains supplemental non-qualified plans for certain officers and other key employees, and an Employee Savings and Stock Option Plan (“ESSOP”) 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 September 30, 2017 and 2016 based on December 31, 2016 and 2015 actuarial measurement dates, respectively:

Defined
pension plan
benefits

Other
postretirement
benefits
(In thousands) 2017 2016 2017 2016
Service cost – benefits earned during the year $ 7
$ 27
$ 28
$ 34
Interest cost on projected benefit obligations 149
453
29
64
Expected return on plan assets (399 ) (544 ) —
—
Amortization of prior service cost —
—
(6 ) (6 )
Amortization of net loss (benefit) 143
156
(12 ) —
Settlement expense —
740
—
—
Net periodic benefit (income) cost $ (100 ) $ 832
$ 39
$ 92

The following table sets forth the components of net periodic benefit cost for the nine months ended September 30, 2017 and 2016 based on December 31, 2016 and 2015 actuarial measurement dates, respectively:

Defined
pension plan
benefits

Other
postretirement
benefits
(In thousands) 2017 2016 2017 2016
Service cost – benefits earned during the year $ 20
$ 82
$ 91
$ 103
Interest cost on projected benefit obligations 936
1,358
146
193
Expected return on plan assets (1,197 ) (1,630 ) —
—
Amortization of prior service cost —
—
(19 ) (19 )
Amortization of net loss (gain) 419
�� 466
(36 ) —
Settlement expense —
740

—
—
Net periodic benefit cost $ 178
$ 1,016
$ 182
$ 277

The Company disclosed in its financial statements for the year ended December 31, 2016 that it was not required to make a minimum contribution to the defined benefit pension plan for the 2017 calendar year. However, a payment of $825,000 was made in September 2017 related to the 2016 plan year. The Company believes that no additional contributions will be required during 2017.

~~The Company also disclosed in its financial statements for the year ended~~ ~~December 31, 2016~~ ~~that it estimated it would pay~~ ~~$0.4 million~~ ~~in other postretirement benefits in~~ ~~2017~~ ~~based on actuarial estimates. As of~~ ~~September 30, 2017~~, $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. Note that the amount of benefits paid in calendar year ~~2017~~ ~~will not impact the expense for postretirement benefits for~~ ~~2017~~.

~~Note 4~~ Accumulated Other Comprehensive Loss

Components of and changes in accumulated other comprehensive loss at September 30, ~~2017~~2023 are as follows:

(In thousands) Unrecognized pension and postretirement benefits Foreign currency Total
Balance at beginning of period $ (10,495 ) $ (1,140 ) $ (11,635 )
Other comprehensive income before reclassifications —
1,545
1,545
Amounts reclassified from accumulated other comprehensive loss, net of tax of $(0.1) million 234
—
234
Net current period other comprehensive income, net of tax 234
1,545
1,779
Accumulated other comprehensive (loss) income $ (10,261 ) $ 405
$ (9,856 )

~~Details~~


(In thousands)	Unrecognized pension and postretirement benefits			Foreign currency			Total
Balance at beginning of period	$	994		$	(6,977	)	$	(5,983	)
Other comprehensive loss before reclassifications		-			(1,313	)		(1,313	)
Amounts reclassified from accumulated other comprehensive loss, net of tax of ($26)		(103	)		-			(103	)
Net current period other comprehensive loss, net of tax		(103	)		(1,313	)		(1,416	)
Accumulated other comprehensive loss	$	891		$	(8,290	)	$	(7,399	)

Table of reclassifications out of accumulated other comprehensive loss during the nine months ended September 30, 2017 are as follows:

(In thousands) Amount reclassified from accumulated other comprehensive loss
Amortization of defined benefit pension items:
Prior service benefit (1) $ (19 )
Amortization of actuarial loss (1) 382
Total before tax 363
Income tax benefit (129 )
Amount reclassified out of accumulated other comprehensive loss $ 234


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

Contents

Components of and changes in accumulated other comprehensive loss at September 30, ~~2016~~2022 are as follows:


(In thousands)	Unrecognized pension and postretirement benefits			Foreign currency			Total
Balance at beginning of period	$	394		$	(258	)	$	136
Other comprehensive loss before reclassifications		-			(13,104	)		(13,104	)
Amounts reclassified from accumulated other comprehensive loss, net of tax of ($5)		(16	)		-			(16	)
Net current period other comprehensive loss, net of tax		(16	)		(13,104	)		(13,120	)
Accumulated other comprehensive loss	$	378		$	(13,362	)	$	(12,984	)

(In thousands) Unrecognized pension and postretirement benefits Foreign currency Total
Balance at beginning of period $ (11,968 ) $ (812 ) $ (12,780 )
Other comprehensive income before reclassifications —
229
229
Amounts reclassified from accumulated other comprehensive loss, net of tax of $(0.4) million 756
—
756
Net current period other comprehensive income, net of tax 756
229
985
Accumulated other comprehensive loss $ (11,212 ) $ (583 ) $ (11,795 )

Details of reclassifications out of accumulated other comprehensive ~~loss~~income during the nine months ended September 30, ~~2016~~2023 and 2022 are ~~as follows:~~immaterial.

(In thousands) Amount reclassified from accumulated other comprehensive loss
Amortization of defined benefit pension items:
Prior service cost (1) $ (19 )
Settlement expense (1) 740
Amortization of actuarial loss (1) 466
Total before tax 1,187
Income tax benefit (431 )
Amount reclassified out of accumulated other comprehensive loss $ 756


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

Note 54 Acquisitions

On May 1, 2017, the Company acquired 100% of the outstanding common stock of D-Flow Technology AB ("D-Flow") of Luleå, Sweden. The D-Flow acquisition facilitates the continued advancement of the existing E-Series® Ultrasonic product line while also adding a technology center for the Company. Sales of D-Flow products were approximately $1.5 million at September 30, 2017.

~~The purchase price was approximately $23.2 million in cash, plus a small working capital adjustment. The purchase price included $5.1 million in payments that~~

Acquisitions are anticipated to be made within eighteen months of the purchase date, of which $4.1 million was recorded in payables on the Consolidated Balance Sheets at June 30, 2017 and $1.0 million was recorded in long-term liabilities. The Company's preliminary allocation of the purchase price included approximately $0.3 million in receivables, $0.6 million in inventory, $0.2 million in machinery and equipment, $10.9 million of intangibles and $11.8 million of goodwill. The majority of the intangible assets acquired related to ultrasonic technology. The Company also assumed $0.6 million of liabilities as part of the acquisition. As of September 30, 2017, the Company had not completed its analysis for estimating the fair value of the assets acquired.

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

~~On October 20, 2016,~~

Effective January 1, 2023, the Company acquired ~~certain assets~~100% of ~~Precision Flow Measurement, Inc.~~the outstanding stock of Syrinix Ltd. ("Syrinix"), ~~doing business as Nice Instrumentation,~~headquartered in the United Kingdom, a provider of ~~Manalapan Township, New Jersey. The acquisition added a new technology for the measurement of steam to the Company's HVAC line of products.~~

high-frequency pressure monitoring and leak detection solutions.

The total purchase consideration for ~~the Nice Instrumentation assets~~Syrinix, net of cash acquired, was ~~$2.0 million, which included a $0.2 million payment that was made after the first production run that occurred in January 2017.~~$17.1 million. The Company's ~~preliminary~~ allocation of the purchase price at ~~December 31, 2016~~September 30, 2023 included ~~approximately $15,000 of inventory and equipment, $0.7~~$0.6 million of ~~intangibles and $1.3~~Receivables, $0.7 million of ~~goodwill.~~Inventories, $0.4 million of Other assets, $7.7 million of Intangible assets and $12.0 million of Goodwill. The intangible assets acquired are primarily developed technology, customer ~~technology~~relationships and trademarks with an estimated average useful ~~life~~lives of 13 to 15 years. The Company also assumed $1.9 million of Payables, $2.0 million of Deferred income taxes and $0.4 million of Other liabilities as part of the acquisition.

The preliminary allocation of ~~the~~ purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. ~~The~~As of September 30, 2023, the Company has not completed its analysis for estimating the fair value of the assets ~~acquired in the first quarter of 2017 with no additional adjustments.~~acquired.

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

Note 65 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 more significant legal proceedings are discussed below.~~

The Company is subject to contingencies related to environmental laws and regulations. The Company is named as one of many potentially responsible parties in two landfill lawsuits. The landfill sites are impacted by the Federal Comprehensive Environmental Response, Compensation and Liability Act and other environmental laws and regulations. At this time, the Company does not believe the ultimate resolution of these matters will have a material adverse effect on the Company’s financial position or results of operations, either from a cash flow perspective or on the financial statements as a whole. This belief is based on the Company’s assessment of its limited past involvement with these landfill sites as well as the substantial involvement of and government focus on other named third parties with these landfill sites. However, due to the inherent uncertainties of such proceedings, the Company cannot predict the ultimate outcome of any of these matters. 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 ~~2016~~2022 and the first ~~three quarters~~nine months of ~~2017~~2023 were not material.

Like other companies in recent years, the Company is named as a defendant in numerous pending multi-claimant/multi-defendant lawsuits alleging personal injury as a result of exposure to asbestos, manufactured by third parties, and in the past may have been integrated into or sold with a very limited number of the Company’s products. The Company is vigorously defending itself against these claims. Although it is not possible to predict the ultimate outcome of these matters, the Company does not believe the ultimate resolution of these issues will have a material adverse effect on the Company’s financial position or results of operations, either from a cash flow perspective or on the financial statements as a whole. This belief is based in part on the fact that no claimant has proven or substantially demonstrated asbestos exposure caused by products manufactured or sold by the Company and that a number of cases have been voluntarily dismissed.

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

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

Note 76 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 ~~as a percentage~~and recording the related deferred tax assets and liabilities. The Company's deferred tax assets and liabilities are measured using the currently enacted tax

Table of earnings beforeContents

rates that apply to taxable income ~~taxes~~ for the ~~third quarter of 2017 was 34.5% compared~~years in which the assets or liabilities are expected to 36.0% in the third quarter of 2016. The provision for income taxes as a percentage of earnings before income taxes for the first three quarters of 2017 was 34.8% compared to 36.1% in the first three quarters of 2016.be realized or settled. Interim provisions are tied to an estimate of the overall annual rate which can vary due to ~~state taxes,~~ the relationship of foreign and domestic earnings, state taxes and ~~production~~available deductions, credits ~~available. These items cause variations between periods.~~and discrete items.

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


	Three months ended September 30,						Nine months ended September 30,
(In thousands)	2023			2022			2023			2022
Earnings before income taxes	$	32,590		$	23,947		$	88,522		$	64,810
Provision for income taxes		6,621			6,014			20,645			15,853
Effective income tax rate		20.3	%		25.1	%		23.3	%		24.5	%

Note 87 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 ~~associated with~~previously employed by the Company. The carrying amounts of these insurance policies approximate their fair value.

Note 98 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 ~~condensed~~ 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 May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope~~9 Revenue Recognition

Revenue for sales of Modification Accounting,” which clarifies when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classificationproducts and services is not the same both before and after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis beginning on January 1, 2018 and early adoption is permitted. The Company does not expect the adoption of this standard to have an impact on its consolidated financial statements as it is not the Company’s practice to change the terms or conditions of share-based payment awards after they are granted.

In March 2017, the FASB issued ASU No. 2017-07 “Compensation – Retirement Benefits (Topic 715)”, which changes the presentation of defined benefit and post-retirement benefit plan expense on the income statement by requiring separation between operating and non-operating expense. Under the ASU, the service cost of net periodic benefit expense is an operating expense that will be reported with similar compensation costs. The non-operating components, which include all other components of net periodic benefit expense, are reported outside of operating income. The ASU also stipulates that only the service cost component of pension and postretirement benefit costs is eligible for capitalization. The ASU is effective for annual periods beginning after December 15, 2017 and interim periods within that annual period. Application is retrospective for the presentation of the components of these benefit costs and prospective for the capitalization of service costs. The Company's net periodic benefit cost components are disclosed in Note 3 "Employee Benefit Plans".

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill: Simplifying the Test for Goodwill Impairment." The update requires a single-step quantitative test to measure potential impairment based on the excess of a reporting unit's carrying amount over its fair value. A qualitative assessment can still be completed first for an entity to determine if a quantitative impairment test is necessary. The ASU is effective for fiscal year 2021 and is to be adopted on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company anticipates that the adoption of this standard will have no impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 "Leases (Topic 842)," which requires lessees to record most leases on their balance sheets. Lessees initially recognize a lease liability (measured at the present value of the lease payments over the lease term) and a right-of-use ("ROU") asset (measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee's initial direct costs). Lessees can make an accounting policy election not to recognize ROU assets and lease liabilities for leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The ASU is effective for the Company beginning on January 1, 2019 and early adoption is permitted. The standard requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is continuing to evaluate the impact that the adoption of this guidance will have on its financial condition, results of operations and the presentation of its consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11 "Simplifying the Measurement of Inventory (Topic 330)," which requires entities to measure inventories at the lower of cost or net realizable value ("NRV"). This simplifies the evaluationderived from the current method of lower of cost or market, where market is based on one of three measures (i.e. replacement cost, net realizable value, or net realizable value less a normal profit margin). The ASU does not apply to inventories measured under the last-in, first-out method or the retail inventory method, and defines NRV as the "estimated selling price in the ordinary

course of business, less reasonably predictable costs of completion, disposal, and transportation." The ASU was adopted on a prospective basis by the Company on January 1, 2017. The adoption of ASU 2015-11 did not have any impact on the Company's financial condition or results of operations.

~~In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers.” ASU No. 2014-09 provides a single principles-based, five-step model to be applied to all~~ contracts with customers. The ~~five steps are to identify~~products and services promised in contracts include the ~~contract(s) with~~sale of utility water and flow instrumentation products, such as flow meters and radios, quality and pressure sensing equipment, software access and other ancillary services. Contracts generally state the terms of sale, including the description, quantity and price of each product or service. Since the customer typically agrees to ~~identify the performance obligations~~a stated rate and price in the contract ~~to determine~~that does not vary over the ~~transaction price, to allocate~~life of the ~~transaction price to~~contract, the ~~performance obligations~~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 ~~contract~~Notes to Unaudited Consolidated Condensed Financial Statements.

The Company disaggregates revenue from contracts with customers into geographical regions and ~~to recognize revenue~~by the timing of when ~~each performance obligation is satisfied. Revenue will be recognized when promised~~ goods orand services are ~~transferred to the customer in an amount~~transferred. The Company determined that ~~reflects the consideration expected in exchange for those goods or services. In addition, the standard requires disclosure of~~disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows ~~arising~~are affected by regional economic factors.

Information regarding revenues disaggregated by geographic area is as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Revenues:
United States	$	165,897	$	128,434	$	459,976	$	362,012
Foreign:
Asia		3,598		4,257		10,159		11,384
Canada		3,476		3,761		9,982		9,669
Europe		9,743		7,489		30,257		22,842
Mexico		643		1,034		2,130		2,419
Middle East		2,217		2,475		6,917		6,258
Other		619		559		1,731		3,660
Total	$	186,193	$	148,009	$	521,152	$	418,244

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


	Three months ended						Nine months ended
	September 30,						September 30,
(In thousands)	2023			2022			2023			2022
Revenue recognized over time	$	11,227	6.0%	$	9,324	6.3%	$	31,896	6.1%	$	25,554	6.1%
Revenue recognized at a point in time		174,966	94.0%		138,685	93.7%		489,256	93.9%		392,690	93.9%
Total	$	186,193	100.0%	$	148,009	100.0%	$	521,152	100.0%	$	418,244	100.0%

The majority of the Company's revenue that is recognized over time relates to the BEACON® AMA software as a service, but also includes training, certain installation and other revenues. The majority of the Company's revenue recognized at a point in time is for the sale of utility and flow instrumentation products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with customers. During 2016, the FASB issued additional ASU’s which enhanced the originally issued guidance. These ASU’s encompassed narrow scope improvements and practical expedients along with providing further clarification on the accounting for intellectual property licenses, principal versus agent considerations and identifying performance obligations.

title transfer during shipping.

The Company ~~has substantially completed the assessment phase~~performs its obligations under a contract by shipping products or performing services in exchange for ~~ASU No. 2014-09 and is finalizing the documentation of formal policies in anticipation of adopting the standard on January 1, 2018.~~consideration. The Company ~~has identified~~typically invoices its customers as soon as control of an asset is transferred and a subset of contracts with customers where services are provided that are both uniquely beneficial and separately identifiable from product sales and thus are considered separate performance obligations underreceivable to the new guidance. Each of these individual service activities has been documented in scenario development and processes are being established to recognize revenue for each unique performance obligation in accordance with the guidance, when effective.Company is established. The Company, ~~continues to proactively address all potential areas of impact related to ASU No. 2014-09. To date,~~however, recognizes a contract liability when a customer prepays for goods or services and the Company has not ~~identified any specific aspect~~transferred control of the ~~new standard that it believes would significantly change~~goods or services.

The closing balances of the ~~Company’s consolidated financial statements beyond adding~~Company's receivables and contract liabilities are as follows:


	September 30, 2023		December 31, 2022
(In thousands)
Receivables	$	89,063	$	76,651
Contract liabilities		57,304		40,700

Contract liabilities are included in Payables and Other long-term liabilities on the ~~expanded disclosure~~Company's Consolidated Condensed Balance Sheets. The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables in the nine-month period ended September 30, 2023 and twelve-month period ended December 31, 2022.

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

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

As of September 30, 2023, the Company had certain contracts with unsatisfied performance obligations. For contracts recorded as contract liabilities, $57.3 million was the ~~ASU.~~

~~The guidance permits two methods~~aggregate amount of ~~adoption: retrospectively~~the transaction price allocated to ~~each prior~~performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method).period. The Company ~~currently anticipates adopting~~estimates that revenue recognized from satisfying those performance obligations will be approximately $3.5 million in 2023, $8.2 million in 2024, $6.1 million in 2025, $5.2 million in 2026, $4.6 million in 2027, $3.9 million in 2028 and $25.8 million thereafter.

Note 10 Leases

The Company rents facilities, equipment and vehicles under operating leases, some of which contain renewal options. Upon inception of a rent agreement, the ~~standard using~~Company determines whether the ~~modified retrospective method.~~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 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 Sheets. Information regarding the Company's right-of-use assets and the corresponding lease liabilities are as follows:


	September 30, 2023		December 31, 2022
(In thousands)
Right-of-use assets	$	5,903	$	6,533
Lease liabilities		6,146		6,792

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 Sheets. The Company's rent expense is as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
(In thousands)
Operating lease expense	$	852	$	819	$	2,552	$	2,517
Variable and short-term lease expense		41		37		117		140
Rent expense	$	893	$	856	$	2,669	$	2,657

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 September 30, 2023 and December 31, 2022, the remaining lease term on the Company's leases was 5.2 years. As of September 30, 2023 and December 31, 2022, the discount rate was 5.0%. The future minimum lease payments to be paid under operating leases are as follows:


	September 30, 2023
(In thousands)
2023 (remaining three months)	$	625
2024		2,501
2025		1,922
2026		807
2027		198
2028		123
Thereafter		881
Total future lease payments		7,057
Present value adjustment		(911	)
Present value of future lease payments	$	6,146

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

~~Business Description and Overview~~

BUSINESS DESCRIPTION AND OVERVIEW

With more than a century of water technology innovation, Badger Meter is ~~an innovator in~~a global provider of industry leading water solutions encompassing flow measurement, ~~control~~quality and ~~communication solutions, serving water utilities, municipalities,~~other system parameters. These offerings provide customers with the data and ~~commercial~~analytics essential to optimize their operations and ~~industrial customers worldwide.~~contribute to the sustainable use and protection of the world’s most precious resource. The ~~Company’s~~Company's flow measurement products measure water ~~oil, chemicals~~ and other fluids and are known for accuracy, long-lasting durability and for providing ~~and communicating~~ valuable and timely measurement ~~data.~~data through various methods. The ~~Company’s product lines~~Company's water quality monitoring solutions include optical sensing and electrochemical instruments that provide real-time, on-demand data parameters. The Company's products fall into two ~~categories:~~product lines: sales of water meters, radios, water quality and pressure monitoring solutions along with software and related technologies to ~~municipal~~ water utilities ~~(municipal~~(utility water) and sales of meters ~~to various industries for water~~ and other ~~fluids~~sensing instruments, valves, software and other solutions for industrial applications in water, wastewater, and other industries (flow instrumentation). The Company estimates that over ~~85%~~90% of its products are used in water ~~applications when both categories are grouped together.~~

~~Municipal~~related applications.

Utility water, the largest ~~category by~~ sales ~~volume, includes~~product line, is comprised of either mechanical ~~and ultrasonic (electronic)~~or static (ultrasonic) water meters along with the related radio and ~~related~~software technologies and services used by ~~municipal~~ water utilities as the basis for generating their water and wastewater ~~revenues.~~revenues, enabling operating efficiencies and engaging with their end consumers. It further comprises other sensor technology used in the water distribution system to ensure the safe and efficient delivery of clean water. These sensors are used to detect pressure anomalies or leaks in the distribution piping system and to monitor various water quality parameters throughout the distribution system. The ~~key~~data from these various instruments and sensors can be incorporated into the software offerings to create actionable insights for utility operators. The largest geographic market for the ~~Company’s municipal~~Company's utility water ~~meter~~ 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. In recent years,~~nature; however, static meters are an increasing percentage of the water meters sold by the Company ~~has made inroads~~and in ~~selling~~the industry, due to a variety of attributes, including their ability to maintain measurement accuracy over their useful life. Providing ultrasonic water ~~meters. The development of smaller diameter ultrasonic water meters combined with~~meter technology, advanced radio technology ~~now~~and software, provides the Company with the opportunity to sell into other geographical markets, for example ~~Europe,~~ the Middle East, Europe and ~~South America. In~~Southeast Asia.

The flow instrumentation product line primarily serves water applications throughout the municipal water category, sales of water meters and related technologies and services are also commonly referred to as residential or commercial water meter sales, the latter referring to larger sizes of water meters.

~~Flow instrumentation~~broader industrial markets. This product line includes meters, valves and ~~valves~~other sensing instruments sold worldwide to measure and control ~~materials flowing~~the quantity of 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, ~~primarily into~~with the ~~following industries:~~Company's primary market focus being water/~~wastewater;~~wastewater, heating, ventilating and air conditioning (HVAC)~~; oil~~ and ~~gas; chemical and petrochemical; test and measurement; automotive aftermarket; and the concrete construction process. Furthermore, the Company’s flow~~corporate sustainability. Flow instrumentation ~~technologies~~products are generally sold to original equipment manufacturers as the primary flow measurement device within a product or ~~system.~~

~~Residential~~system, as well as through manufacturers’ representatives.

Utility water meters (both residential and ~~commercial water meters~~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 ~~or mobile,~~ 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 the utilities’ meters; or ~~fixed network~~ advanced metering infrastructure (AMI) systems, where data is gathered utilizing a network (either fixed or cellular) of ~~permanent~~ data collectors or gateway receivers that are ~~always active or listening for the~~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 mobile~~AMR meter ~~reading),~~reading, ORION ~~Fixed Network~~ (SE) ~~(for~~for traditional fixed network ~~applications),~~applications, and ORION Cellular ~~(for~~for an infrastructure-free ~~meter reading).~~AMI solution. ORION ~~Migratable makes~~ME is the ~~migration to fixed network easier~~solution best suited 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.~~reading. ORION Cellular eliminates the need for utility-owned fixed network infrastructure, allows for ~~rapid~~gradual or full deployment, and decreases ongoing maintenance.

~~Critical~~

Information and analytics are critical to the smart water ~~metering ecosystem is information and analytics.~~ecosystem. The ~~Company’s~~Company's BEACON ~~AMA Managed Solution is the latest in metering technology. BEACON AMA combines the BEACON analytical~~ software suite ~~with proven ORION technologies using two-way fixed and cellular networks in a managed solution, improving utilities’~~improves utility near real-time visibility ofto their water ~~consumption~~including usage, pressure and ~~eliminating the need for costly utility-managed infrastructure.~~

~~The~~quality. BEACON ~~AMA~~is a secure, cloud-hosted software suite that includes a customizable dashboard and has the ability to establish alerts for specific ~~conditions, and~~conditions. It also allows for consumer engagement tools that ~~allow~~permit end water ~~customers~~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,

pressure and quality monitoring, the ability to promote and quantify the effects of its water conservation efforts, and easier compliance reporting.

The Company’s net sales and corresponding net earnings depend on unit volume and product mix, with the Company generally earning higher margins on meters equipped with radio technology. The Company’s proprietary radio products generally result in higher margins than the 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.

Water meter replacement and the adoption and deployment of new technology comprise the majority of smart 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~~The industry continues to undergo a ~~growing trend in the~~ conversion from manually read water meters to meters with radio ~~technology. This conversion rate is accelerating~~technology, and ~~contributes~~for AMR systems to ~~an increased water meter and radio solutions base of business.~~be upgraded to AMI. The Company estimates that approximately ~~55%~~70% of water meters installed in the United States have been converted to some form of radio solution technology.

In addition to our water utility flow measurement solutions, the Company provides various water quality and pressure monitoring solutions. Water quality is monitored utilizing optical sensors and electrochemical instruments that measure a variety of parameters including turbidity, pH, chlorine, nitrates and approximately 40 others. Water pressure is monitored utilizing high frequency acoustic pressure sensors that measure pressure transients, flow bursts and noise to detect and map system leaks. Utilizing these solutions, water quality and pressure can be monitored continually or periodically throughout the network from its original source to the point in which it is recycled and returned. Real-time water quality and pressure parameters enhance the scope of actionable data for water utilities to improve operational security, awareness and efficiency.

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 coupled with radio ~~solutions technology.~~technology, software, and on ultrasonic compared to mechanical meters. The ~~Company’s strategy is~~Company also sells registers and endpoints separately to ~~fulfill customers’ metering expectations and requirements with its proprietary meter reading systems or other systems available through its alliance partners~~customers who wish to upgrade their existing meters in the ~~marketplace.~~

field.

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

~~Industries today~~

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.

~~An industry~~

A leader in both mechanical and ~~electrical~~static flow metering technologies for industrial markets, the Company offers one of the broadest flow measurement, control and communication portfolios in the market. ~~The~~This portfolio carries respected brand names including Recordall®, ~~E-Series, ORION,~~ Hedland®, Dynasonics®, Blancett®, ModMag®, 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.

~~Business Trends~~

~~Increasingly, the electric utility industry relies on AMI technology for two-way communication to monitor and control electrical devices at the customer's site. Although~~

In addition, the Company ~~does not sell~~provides various water quality monitoring solutions utilizing optical sensors and electrochemical instruments that measure a variety of parameters providing industrial customers with both process and discharge water quality monitoring capabilities. It also provides pressure monitoring and acoustic leak detection sensors and related software.

The Company's products ~~for electric market applications,~~are sold throughout the ~~trend toward AMI affects~~world through employees, resellers and representatives.

Long-Term Business Trends

Across the markets in which the Company does participate, particularly for those customers in the water utility market that are interested in more frequent and diverse data collection. Specifically, AMI and AMA technologies enable water utilities to capture readings from each meter at more frequent and variable intervals. Similar to the electric utility industry’s conversion to solid-state meters in recent years, the water utility industry is beginning the conversion from mechanical to ultrasonic meters. Ultrasonic water metering has lower barriers to entry, which could affect the competitive landscape for the water meter market in North America.

The Company sells its technology solutions to meet customer requirements. Since the technology products have comparable margins, any change in the mix between AMR, AMI or AMA is not expected to have a significant impact on the Company's net sales related to meter reading technology.

There are approximately 52,000 water utilities in the United States and the Company estimates that approximately 55% of them have converted to a radio solutions technology. With the BEACON AMA managed solution and its wide breadth of water meters, the Company believes it is well positioned to meet customers' future needs.

~~In the global market, companies need to comply with~~globe, increasing regulations, ~~requiring~~aging infrastructure, labor challenges, and a focus on climate-change and sustainability are driving companies and utilities to better manage critical resources ~~monitor their use of hazardous materials, and reduce exhaust gases.~~like water. Some customers measure fluids to identify leaks, ~~and/or misappropriation for cost~~ control costs or add measurement points to help automate manufacturing. Other customers employ measurement to comply with government mandates and ~~laws.~~laws including those associated with process and discharge water quality monitoring. The Company provides flow measurement technology to primarily measure water, ~~hydrocarbon-based~~but also other fluids, ~~chemicals,~~ gases and ~~steams.~~

~~Flow measurements are~~steam. This technology is critical to provide a baseline usage data and to quantify reductions as customers attempt to reduce consumption. ~~Once~~For example, once water usage ismetrics are better understood, a strategy for water-use reduction can be developed with specific water-reduction initiatives targeted to those areas where ~~water reduction~~it is most viable. With the ~~Company’s~~Company's technology, customers have found costly leaks, pinpointed equipment in need of repair, and identified areas for process improvements.

Increasingly, customers in the utility water market are interested in more frequent and diverse data collection and the use of water metering, pressure and quality analytics to evaluate water distribution system activity. 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 more than 70% of their respective connections have converted to a radio solution, of which the Company estimates approximately half still utilize AMR technology. The Company believes it is well positioned to meet the continuing conversion trends to AMI 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 over a decade of proven reliability in the market with its ultrasonic meters, which the Company believes increases its competitive differentiation.

For over 118 years, the Company has offered innovative flow metering and control solutions for smart water management, smart buildings and smart industrial processes. Recent acquisitions have broadened and enhanced the scope of actionable data for customers to help measure, conserve and protect water. This includes real-time water quality monitoring solutions and high frequency pressure monitoring and acoustic leak detection capabilities. The combined solutions from Badger Meter offer hardware-enabled software solutions that improve efficiency, resiliency and sustainability across the water eco-system.

Finally, the concept of “Smart Cities” is 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 water. Badger Meter is well positioned to benefit from the advancement of Smart Water applications. With its strong relationship with major cellular network providers, Badger Meter stays abreast of emerging cellular technology changes which the Company believes is the premier infrastructure-free AMI solution.

Acquisitions

~~On May~~

Effective January 1, ~~2017,~~2023, the Company acquired 100% of the outstanding ~~common~~ stock of ~~D-Flow Technology AB~~Syrinix Ltd. ("~~D-Flow"~~Syrinix"), headquartered in the United Kingdom, a provider of ~~Luleå, Sweden.~~ high-frequency pressure monitoring and leak detection solutions.

The ~~D-Flow acquisition facilitates the continued advancement~~total purchase consideration for Syrinix, net of ~~the existing E-Series Ultrasonic product line while also adding a technology center for the Company. Sales of D-Flow products were approximately $1.5 million at September 30, 2017.~~

~~The purchase price~~cash acquired, was approximately $23.2 million in cash, plus a small working capital adjustment. The purchase price included $5.1 million in payments that are anticipated to be made within eighteen months of the purchase date, of which $4.1 million was recorded in payables on the Consolidated Balance Sheets at June 30, 2017 and $1.0 million was recorded in long-term liabilities.$17.1 million. The Company's ~~preliminary~~ allocation of the purchase price at September 30, 2023 included ~~approximately $0.3 million in receivables,~~ $0.6 million ~~in inventory, $0.2 million in machinery and equipment, $10.9~~of Receivables, $0.7 million of ~~intangibles and $11.8~~Inventories, $0.4 million of ~~goodwill.~~Other assets, $7.7 million of Intangible assets and $12.0 million of Goodwill. The ~~majority of the~~ intangible assets acquired ~~related~~are primarily developed technology, customer relationships and trademarks with estimated average useful lives of 13 to ~~ultrasonic technology.~~15 years. The Company also assumed ~~$0.6~~$1.9 million of Payables, $2.0 million of Deferred income taxes and $0.4 million of Other liabilities as part of the acquisition.

The preliminary allocation of purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of September 30, ~~2017,~~2023, the Company ~~had~~has not completed its analysis for estimating the fair value of the assets acquired. ~~This acquisition is further described in Note 5 “Acquisitions” in the Notes to Consolidated Condensed Financial Statements.~~

On October 20, 2016, the Company acquired certain assets of Precision Flow Measurement, Inc., doing business as Nice Instrumentation, of Manalapan Township, New Jersey. The acquisition added a new technology for the measurement of steam to the Company's HVAC line of products.

The total purchase consideration for the Nice Instrumentation assets was $2.0 million, which included a $0.2 million payment that was made after the first production run that occurred in January 2017. The Company's preliminary allocation of the purchase price at December 31, 2016 included approximately $15,000 of inventory and equipment, $0.7 million of intangibles and $1.3 million of goodwill. The Company completed its analysis for estimating the fair value of the assets

~~acquired in the first quarter of 2017 with no further adjustments. This acquisition is further described in Note 5 “Acquisitions” in the Notes to Consolidated Condensed Financial Statements.~~

Revenue and Product Mix

As the industry continues to evolve, the Company has been ~~vigilant~~at the forefront of innovation across metering, radio and software technologies in ~~anticipating~~order to meet its customers’ increasing expectations for accurate and ~~exceeding customer expectations.~~ actionable data and analytics. As technologies such as ORION Cellular and BEACON digital 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.

In ~~2011,~~addition, the Company ~~introduced AMA as a hardware and software solution~~has expanded its smart water offering with the addition of online water quality monitoring solutions, adding real-time water quality parameters to augment the scope of actionable data for water utility and ~~gas utilities,~~industrial customers to optimize their operations, as well as pressure monitoring and then in early 2014 launched its new BEACON AMA system, as a managed solution, which it believes will help maintain the Company's position as a market leader. Since its inception, sales of BEACON AMA have continued to grow with both municipalities and private water utilities selecting BEACON AMA and the Company’s industry-leading water meters.

leak detection capabilities.

The Company ~~continues to seek~~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. ~~The~~In these cases, the Company assumes the role of general contractor ~~hiring~~and typically hires installation subcontractors and ~~supervising~~supervises their work. ~~The Company also supports its product and technology sales with the sale~~

Table of extended service programs that provide additional services beyond the standard warranty. In recent years, the Company has sold ORION radio technology to natural gas utilities for installation on their gas meters. And most recently, the introduction of the BEACON AMA system opens the door to “software as a service” revenues. With the exception of a large sale of gas radios to one particular customer several years ago, revenues from such products and services are not yet significant and the Company is uncertain of the potential growth achievable for such products and services in future periods.

Contents

Results of Operations - Three Months Ended September 30, ~~2017~~

2023

Net Sales

The ~~Company’s~~Company's net sales for the three months ended September 30, ~~2017 increased $3.7~~2023 were $186.2 million, ~~or 3.9%, to $100.0 million~~an increase of 25.8% compared to ~~$96.3~~$148.0 million during the same period in ~~2016.~~

~~Municipal~~2022. Sales into the utility water market were $160.8 million, an increase of 30.6% from the prior year’s $123.1 million. The Company's net sales ~~represented 74.7%~~grew as a result of ~~sales in~~robust adoption of cellular AMI solutions, specifically ORION Cellular endpoint and BEACON SaaS revenues, as well as an increased proportion of ultrasonic meters. Sales of products into the ~~third quarter of 2017~~flow instrumentation end markets were $25.4 million compared to ~~77.4% in~~ the ~~third quarter~~prior year’s $24.9 million, an increase of 2016. These sales increased $0.2 million, or 0.3%, to $74.7 million in the third quarter of 2017 from $74.5 million in the third quarter of 2016. The slight increase is the net impact of higher commercial water meter sales and the inclusion of $0.8 million of sales from D-Flow, which was acquired earlier in 2017, offset somewhat by lower sales of residential meters and related technologies. A portion of the decrease in residential sales was due to lower international sales, particularly in the Middle East, where sales tend to be sporadic.

1.8%. Flow instrumentation sales ~~represented 25.3%~~increased as a result of ~~sales~~steady order demand within the water-focused end markets, offset by modest decline in other industrial markets.

Earnings

Total operating earnings for the three months ended September 30, ~~2017~~2023 were $31.4 million, or 16.9% of sales, compared to ~~22.6% during the same period in 2016. These sales increased $3.5~~$23.9 million, or 16.1%~~, to $25.3 million from $21.8 million in the same period last year. The increase was due to higher~~ of sales, in the ~~oil and gas market as well as additional sales gains that resulted from efforts to broaden the Company's distribution channels.~~

comparable prior year quarter. Gross margin dollars increased $15.2 million, with gross margin as a ~~percentage~~percent of sales ~~was 37.0%~~of 39.1%, an increase from 38.9% of sales in the ~~third quarter of 2017 compared to 40.1%~~prior year comparable quarter. Gross margin improvement in the ~~third quarter of 2016. The lower percentage~~current year was ~~due to~~driven by higher ~~material costs, primarily brass, as well as higher warranty, obsolescence~~volumes and ~~after-sales costs.~~

favorable sales mix. Selling, engineering and administration (“SEA”) expenses ~~for the three months ended September 30, 2017 decreased slightly to $24.6~~were $41.3 million or 22.2% of sales compared to ~~$24.7~~$33.7 million or 22.7% of sales in the ~~third quarter of 2016, which included a $0.7 million non-cash pension settlement charge that did not recur~~comparable prior year quarter. The increase in spending primarily relates to higher personnel-related investments, while the ~~third quarter of 2017. Also impacting the net change~~year-over-year improvement in SEA expense leverage was the ~~addition~~result of ~~expenses associated with D-Flow in 2017.~~

~~Operating earnings for the third quarter of 2017 decreased $1.5 million, or 10.8%, to $12.4 million compared to $13.9 million in the same period in 2016. The decrease was driven by~~effective spending controls and higher ~~material, warranty, obsolescence and after-sales costs.~~

sales.

The provision for income taxes as a percentage of earnings before income taxes for the ~~third~~ quarter ~~of 2017~~ended September 30, 2023 was ~~34.5%~~20.3% compared to ~~36.0% in~~25.1% for the ~~third~~comparable prior year period. The current year quarter ~~of 2016.~~effective tax rate included a discrete income tax benefit related to stock option exercises and restricted stock vesting transactions. Interim provisions are ~~tied to~~based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and ~~production and~~ other credits ~~available.~~

and allowances.

As a result of the above-mentioned items, net earnings for the three months ended September 30, ~~2017~~2023 were ~~$8.0~~$26.0 million, or ~~$0.27~~$0.88 per diluted share, compared to ~~$8.8~~$17.9 million, or ~~$0.30~~$0.61 per diluted share, for the same period in ~~2016.~~

2022.

Results of Operations - Nine Months Ended September 30, ~~2017~~

2023

Net Sales

The ~~Company’s~~Company's net sales for the nine months ended September 30, ~~2017 increased $5.1~~2023 were $521.2 million, ~~or 1.7%~~an increase of 24.6%, ~~to $305.8 million~~ compared to ~~$300.7~~$418.2 million during the same period in ~~2016.~~

~~Municipal~~2022. Sales into the utility water market were $443.9 million, an increase of 27.7% from the prior year’s $347.6 million. The Company's net sales ~~represented 76.2%~~grew as a result of ~~sales for~~increased ultrasonic meter, ORION Cellular endpoint and BEACON SaaS revenues, as well as value-based pricing actions. Sales of products into the ~~first nine months of 2017~~global flow instrumentation end markets were $77.3 million compared to ~~77.1% for~~ the ~~first nine months~~prior year’s $70.6 million, an increase of 2016. These sales increased $1.1 million, or 0.5%, to $233.0 million from $231.9 million in 2016. This is the net impact of higher commercial water meter sales and the inclusion of $1.5 million of sales from D-Flow, which was acquired earlier in 2017, offset somewhat by lower sales of residential meters and related technologies. A portion of the decrease in residential sales was due lower international sales, particularly in the Middle East, where sales tend to be sporadic.

9.3%. Flow instrumentation sales ~~represented 23.8%~~increased due to steady demand across the majority of ~~sales~~end-markets and applications.

Earnings

Total operating earnings for the nine months ended September 30, ~~2017~~2023 were $86.0 million, or 16.5% of sales, compared to ~~22.9% in the same period in 2016. These sales increased $4.0~~$64.8 million, or ~~5.8%, to $72.8 million for the first nine months~~15.5% of ~~2017 compared to $68.8 million in the same period last year. The increase was due to higher~~ sales, in the ~~oil and gas market as well as additional sales gains that resulted from efforts to broaden the Company's distribution channels.~~

comparable prior year period. Gross margin dollars increased $42.0 million, with gross margin as a ~~percentage~~percent of sales of 39.3%, an increase from 39.0% of sales in the prior year comparable period. Gross margin improvement was ~~38.2% for~~ the ~~first nine months~~result of ~~2017~~favorable product mix, production efficiencies resulting from easing supply chain constraints, and value-based pricing actions. SEA expenses were $119.0 million or 22.8% of sales compared to ~~38.9%~~$98.2 million or 23.5% of sales in the ~~same period~~comparable prior year period. The increase in ~~2016. The decrease was due~~spending primarily relates to higher personnel-related investments, while the ~~higher cost of materials, which was driven by brass costs.~~

~~Selling, engineering and administration expenses for the nine months ended September 30, 2017 decreased $1.1 million, or 1.5%, to $74.3 million from $75.4 million~~year-over-year improvement in ~~the same period in 2016, which included a $0.7 million non-cash pension settlement charge that did not recur to date in 2017. Also impacting the net change~~SEA expense leverage was the ~~addition of expenses associated with D-Flow in 2017.~~

~~Operating earnings for the first nine months of 2017 increased $0.8 million, or 1.9%, to $42.5 million compared to $41.7 million in the same period in 2016 as a~~ result of effective spending controls and higher ~~overall sales and lower selling, engineering and administration expenses, offset somewhat by lower gross margins.~~

sales.

The provision for income taxes as a percentage of earnings before income taxes for the ~~first~~ nine months ~~of 2017~~ended September 30, 2023 was ~~34.8%~~23.3% compared to ~~36.1%~~24.5% for the ~~same period in 2016.~~comparable prior year period. Interim provisions are ~~tied to~~based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and ~~production~~other credits ~~available. The provision for the nine months ended September 30, 2017 also includes the impacts~~and allowances.

Table of certain discrete credits.

Contents

As a result of the above-mentioned items, net earnings for the nine months ended September 30, ~~2017~~2023 were ~~$27.3~~$67.9 million, or ~~$0.94~~$2.30 per diluted share, compared to ~~$26.2~~$49.0 million, or ~~$0.90~~$1.67 per diluted share, for the same period in ~~2016.~~

~~Liquidity and Capital Resources~~

2022.

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:


	September 30, 2023				December 31, 2022
(In thousands)	$			PWC%	$			PWC%
Receivables	$	89,063		13.3%	$	76,651		13.5%
Inventories		147,788		22.1%		119,856		21.2%
Payables		(84,997	)	-12.7%		(71,440	)	-12.6%
Primary Working Capital	$	151,854		22.7%	$	125,067		22.1%

Overall, PWC increased $26.8 million compared to the previous year-end. Receivables at September 30, 2023 increased $12.4 million due to higher sales activity. Inventories increased $27.9 million due to component cost inflation, higher safety stock levels and increased sales activity. Payables at September 30, 2023 were $13.5 million higher than year-end due to inflationary increases, increased inventory balance and the timing of payments relative to quarter end.

Cash Provided by Operations

Cash provided by operations in the first nine months of 2023 was ~~$45.9~~$72.2 million compared to $52.7 million in the same period of 2022. Higher net earnings, offset by increased working capital balances, contributed to the increase in cash provided by operations compared to the same period in 2022.

Property, plant and equipment expenditures for the first nine months of ~~2017~~2023 were $9.9 million compared to ~~$40.2 million through the first nine months of 2016. The increase was due to the higher earnings and efforts to control inventory balances. The September 30, 2017 cash amount includes approximately~~ $4.7 million ofin the comparable prior year period.

Cash and cash ~~denominated in Swedish krona, which is anticipated~~equivalents increased to ~~be used within the next eighteen months to satisfy an equal amount of Swedish denominated liabilities that arose~~$162.9 million from ~~the acquisition of D-Flow.~~

~~Receivables increased from $59.8~~$138.1 million at December 31, ~~2016 to $68.9 million at September 30, 2017. The higher receivables balance was due to increased sales in~~2022, the ~~third quarter of 2017 compared to the fourth quarter of 2016. Generally, the receivables balance is lower at year-end than at other times~~result of the ~~year. The Company believes its net receivables balance is fully collectible.~~

~~Inventories decreased to $77.0~~$72.2 million ~~at September 30, 2017 from $77.7 million at December 31, 2016 due to higher sales and the timing of inventory purchases.~~

Net property, plant and equipment at September 30, 2017 increased to $93.1 million from $90.2 million at December 31, 2016. This increase was the net effect of $11.6 million of capital expenditures in the first three quarters of 2017, which wascash provided by operations, offset ~~somewhat by depreciation expense.~~

Intangible assets increased to $57.8 million at September 30, 2017 from $51.9 million at December 31, 2016 due to the acquisition of D-Flow, offset somewhat by normal amortization expense. The acquisition of D-Flow also accounted for the increase in goodwill from $49.3 million at December 31, 2016 to $61.2 million at September 30, 2017.

~~Short-term debt at September 30, 2017 increased to $45.0 million from $38.0 million at December 31, 2016 due primarily to the acquisition of D-Flow.~~

~~Payables of $27.1 million at September 30, 2017 increased from $18.4 million at December 31, 2016. These balances were impacted~~ by the ~~timing~~$17.1 million (net of ~~purchases~~cash acquired) deployed to acquire Syrinix and ~~payments.~~ payment of quarterly dividends.

The ~~September 30, 2017 balance also~~Company's credit facility includes ~~approximately $4.7~~a $150.0 million ~~of Swedish krona denominated liabilities related to the acquisition of D-Flow.~~

Accrued compensation and employee benefits decreased to $13.8 million at September 30, 2017 from $13.9 million at December 31, 2016 due primarily to payments made in 2017 for prior year employee incentives, offset somewhat by employee incentive compensation earned to date in 2017.

The overall increase in total shareholders’ equity from $256.2 million at December 31, 2016 to $274.1 million at September 30, 2017 was the effect of net earnings and stock options exercised, offset by dividends paid and repurchased stock.

~~The Company’s financial condition remains strong. In September 2016, the Company amended its May 2012 credit agreement with its primary lender to a three-year $125.0 million~~multi-currency line of credit that supports commercial paper (up to ~~$70.0~~$100.0 million). The facility includes several features that enhance the Company's financial flexibility including an increase feature, acquisition holiday, and ~~includes $5.0 million of a Euro line of credit. While the facility is unsecured, there are a number of~~favorable financial ~~covenants with which the Company must comply, and the~~covenants. The Company was in compliance with all covenants as of September 30, ~~2017.~~2023. 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. The Company ~~continues to take advantage of its local commercial paper market and carefully monitors the current borrowing market. The Company~~ had ~~$88.2~~$154.2 million of unused credit lines available at September 30, ~~2017.~~

2023.

Other Matters

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 more significant legal proceedings are discussed below.

The Company is subject to contingencies related to environmental laws and regulations. The Company is named as one of many potentially responsible parties in two landfill lawsuits. The landfill sites are impacted by the Federal Comprehensive Environmental Response, Compensation and Liability Act and other environmental laws and regulations. At this time, the Company does not believe the ultimate resolution of these matters will have a material adverse effect on the Company’s financial position or results of operations, either from a cash flow perspective or on the financial statements as a whole. This belief is based on the Company’s assessment of its limited past involvement with these landfill sites as well as the substantial involvement of and government focus on other named third parties with these landfill sites. However, due to the inherent uncertainties of such proceedings, the Company cannot predict the ultimate outcome of any of these matters. 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 ~~2016~~2022 and the first three quarters of ~~2017~~2023 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”~~"Risk Factors" in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 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~~Company's financial performance and results of operations.

Off-Balance Sheet Arrangements and Contractual Obligations

The ~~Company’s~~Company's off-balance sheet arrangements and contractual obligations are discussed in Part II, Item 7 ~~“Management’s~~"Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations" under the headings ~~“Off-Balance~~"Off-Balance Sheet ~~Arrangements”~~Arrangements" and ~~“Contractual Obligations”~~"Contractual Obligations" in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 and have not materially changed since that report was filed unless otherwise indicated in this Quarterly Report on Form 10-Q.

Item 3Quantitative and Qualitative Disclosures about Market Risk

The ~~Company’s~~Company's quantitative and qualitative disclosures about market risk are included in Part II, Item 7 ~~“Management’s~~"Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations" under the heading ~~“Market Risks”~~"Market Risks" in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 and have not materially changed since that report was filed.

Item 4Controls 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~~Company's management evaluated, with the participation of the ~~Company’s~~Company's Chairman, President and Chief Executive Officer and the ~~Company’s~~Company's Senior Vice President - ~~Finance,~~ Chief Financial Officer, ~~and Treasurer,~~ the effectiveness of the design and operation of the ~~Company’s~~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 September 30, ~~2017.~~2023. Based upon their evaluation of these disclosure controls and procedures, the ~~Company’s~~Company's Chairman, President and Chief Executive Officer and the ~~Company’s~~Company's Senior Vice President ~~- Finance,~~– Chief Financial Officer ~~and Treasurer~~ concluded that, as of the date of such evaluation, the ~~Company’s~~Company's disclosure controls and procedures were effective.

Changes in Internal Control ~~over~~Over Financial Reporting

There was no change in the ~~Company’s~~Company's internal control over financial reporting that occurred during the quarter ended September 30, ~~2017~~2023 that has materially affected, or is reasonably likely to materially affect, the ~~Company’s~~Company's internal control over financial reporting.

Part II – Other Information

Item 1ARisk 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, 2022

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

In February 2023, the Board of Directors authorized the repurchase of up to 200,000 shares of the Company's Common Stock through February 2026. The Company did not make any purchases of equity securities under the repurchase program during the quarter ended September 30, 2023.


	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
July 1, 2023 - July 31, 2023		-	$	-		-		200,000
August 1, 2023 - August 31, 2023		-	$	-		-		200,000
September 1, 2023 - September 30, 2023		-	$	-		-		200,000
Total as of September 30, 2023		-				-		200,000

Item 5 Other Information

During the third quarter of 2023, none of our directors or executive officers adopted or terminated any "Rule 10b5-1 trading arrangement" or non-Rule 10b-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).

Item 6 Exhibits

EXHIBIT INDEX



Exhibit No.		Description

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~~Company's Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2017~~2023 formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(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) the Consolidated Condensed Statements of Shareholders’ Equity and (vi) Notes to Unaudited Consolidated Condensed Financial Statements, tagged as blocks of text and ~~(vi) document~~including detailed tags.

104		Cover Page Interactive Data File (formatted as iXBRL and ~~entity information.~~contained in Exhibit 101).

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: October ~~25, 2017~~24, 2023	By	/s/ ~~Richard A. Meeusen~~Kenneth C. Bockhorst
		~~Richard A. Meeusen~~ Kenneth C. Bockhorst
		Chairman, President and Chief Executive Officer

	By	/s/ ~~Richard E. Johnson~~Robert A. Wrocklage
		~~Richard E. Johnson~~ Robert A. Wrocklage
		Senior Vice President – ~~Finance,~~ Chief Financial Officer ~~and Treasurer~~

	By	/s/ ~~Beverly L. P. Smiley~~Daniel R. Weltzien
		~~Beverly L. P. Smiley~~ Daniel R. Weltzien
		Vice President – Controller

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Table of the U.S. Foreign Corrupt Practices Act (FCPA) or other anti-corruption laws and the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act (referred to as FATCA);

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Table of reclassifications out of accumulated other comprehensive loss during the nine months ended September 30, 2017 are as follows:

Table of earnings beforeContents

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Table of certain discrete credits.

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	Nine Months Ended
	September 30
	(Unaudited) (In thousands)
	2017			2016
Operating activities:
Net earnings	$	27,338		$	26,182
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation	9,079			8,477
Amortization	9,089			8,569
Deferred income taxes	(188		)	144
Noncurrent employee benefits	(606		)	671
Contribution to pension plan	(825		)	(1,000		)
Stock-based compensation expense	1,191			1,137
Changes in:
Receivables	(8,041		)	(1,276		)
Inventories	1,929			(3,499		)
Prepaid expenses and other assets	(4,580		)	(236		)
Liabilities other than debt	11,543			1,014
Total adjustments	18,591			14,001
Net cash provided by operations	45,929			40,183

Investing activities:
Property, plant and equipment expenditures	(11,554		)	(7,849		)
Acquisitions, net of cash acquired and future payments	(18,376		)	—
Net cash used for investing activities	(29,930		)	(7,849		)

Financing activities:
Net increase (decrease) in short-term debt	1,411			(21,710		)
Dividends paid	(10,444		)	(9,126		)
Proceeds from exercise of stock options	1,167			509
Repurchase of treasury stock	(3,677		)	—
Issuance of treasury stock	594			507
Net cash used for financing activities	(10,949		)	(29,820		)

Effect of foreign exchange rates on cash	1,006			(8		)

Increase in cash	6,056			2,506
Cash – beginning of period	7,338			8,163
Cash – end of period	$	13,394		$	10,669



	Defined pension plan benefits						Other postretirement benefits
(In thousands)	2017			2016			2017			2016
Service cost – benefits earned during the year	$	7		$	27		$	28		$	34
Interest cost on projected benefit obligations	149			453			29			64
Expected return on plan assets	(399		)	(544		)	—			—
Amortization of prior service cost	—			—			(6		)	(6		)
Amortization of net loss (benefit)	143			156			(12		)	—
Settlement expense	—			740			—			—
Net periodic benefit (income) cost	$	(100	)	$	832		$	39		$	92



(In thousands)	Unrecognized pension and postretirement benefits			Foreign currency			Total
Balance at beginning of period	$	(10,495	)	$	(1,140	)	$	(11,635	)
Other comprehensive income before reclassifications	—			1,545			1,545
Amounts reclassified from accumulated other comprehensive loss, net of tax of $(0.1) million	234			—			234
Net current period other comprehensive income, net of tax	234			1,545			1,779
Accumulated other comprehensive (loss) income	$	(10,261	)	$	405		$	(9,856	)



(In thousands)	Amount reclassified from accumulated other comprehensive loss
Amortization of defined benefit pension items:
Prior service benefit (1)	$	(19	)
Amortization of actuarial loss (1)	382
Total before tax	363
Income tax benefit	(129		)
Amount reclassified out of accumulated other comprehensive loss	$	234