Exhibit 99.1
Badger Meter Reports Record Sales for 2006
MILWAUKEE--(BUSINESS WIRE)--Feb. 6, 2007--Badger Meter, Inc.
(AMEX: BMI) today reported record sales from continuing operations for
the fourth quarter and year ended December 31, 2006, and increased
earnings from continuing operations for the year ended December 31,
2006.
2006 Highlights
-- Net sales from continuing operations were a record
$229,754,000, a 12.8% increase from sales of $203,637,000 in
2005.
-- Earnings from continuing operations before income taxes were
$27,489,000 in 2006, a 7.1% increase from earnings from
continuing operations before income taxes of $25,664,000 in
2005. Earnings from continuing operations exclude the results
of the company's French subsidiary, which has been classified
as a discontinued operation in accordance with current
accounting standards.
-- Net earnings were $7,548,000 for 2006, a 43.0% decrease from
earnings of $13,253,000 in 2005, due to the losses on
discontinued operations.
-- Diluted earnings per share were $0.52 in 2006, a 45.3%
decrease from earnings of $0.95 per diluted share in 2005, due
to the losses on discontinued operations.
Fourth Quarter 2006 Highlights
-- Net sales from continuing operations were $52,705,000 for the
fourth quarter of 2006, an 8.4% increase from sales of
$48,643,000 for the fourth quarter of 2005.
-- Earnings from continuing operations before income taxes were
$4,534,000 for the fourth quarter of 2006, a 16.6% decrease
from earnings from continuing operations before income taxes
of $5,435,000 for the same period in the prior year.
-- The company reported a net loss of $213,000 for the fourth
quarter of 2006, compared to net earnings of $1,727,000 for
the comparable prior period, due to the losses on discontinued
operations.
-- The net loss per diluted share in the fourth quarter of 2006
was $0.01, compared to earnings of $0.12 per diluted share for
the fourth quarter of 2005, due to the losses on discontinued
operations.
Operations Review
"The record 2006 sales were driven by double-digit increases in
sales of our Orion(R) proprietary radio frequency automatic meter
reading (AMR) system for the utility residential market and sales of
commercial products for the utility market. Industrial sales also
increased, primarily due to higher sales of our new line of
Magnetoflow(R) meters," said Richard A. Meeusen, chairman, president
and chief executive officer of Badger Meter.
Meeusen said net earnings for the fourth quarter and the year were
affected by higher metal costs, particularly copper, and charges
related to the shutdown of the company's subsidiary in Nancy, France.
"The higher copper costs reduced operating margins in 2006, however we
are encouraged by the recent downward trend in material costs. While
the cost reductions came too late to help us in the fourth quarter, we
expect the lower copper costs combined with our mid-2006 price
increases to benefit our margins in 2007," said Meeusen.
"The operations of our French subsidiary have been discontinued as
of December 31, 2006 and the remaining assets will be liquidated
during 2007. Through the end of the year, shutdown charges amounted to
$5,409,000 or $0.38 per diluted share and we expect the final total
will be within our previously announced range of $6 to $8 million,"
said Meeusen. These charges were in addition to French operating
losses of $3,611,000 or $0.25 per diluted share in 2006.
"With the closing of the French operation essentially completed,
we can now focus on the areas with the greatest growth and profit
potential, such as automatic meter reading. To facilitate the
increasing demand for Orion(R) and other metering products, we moved
our operations in Rio Rico, Arizona, to a new and larger facility in
Nogales, Mexico, and will begin the second phase of this expansion in
2007," said Meeusen.
Meeusen said research and development continues to be a focus.
"Developing new products and product enhancements is a key growth
strategy for Badger Meter, as we work to leverage our technology
leadership, especially in AMR, into increased sales and earnings. We
plan to introduce several new products in 2007 that will further
strengthen our product line," said Meeusen.
During 2006, the company increased the quarterly cash dividend for
the 14th consecutive year. He also noted that the company's balance
sheet remains strong, with a debt-to-capitalization ratio of 27.1% at
year-end 2006.
"We believe we are well positioned to benefit from the
opportunities in the growing AMR market, as well as in the markets for
our large commercial meters and industrial products. Overall, we are
optimistic about 2007 and our ability to deliver increased value to
our shareholders over the long term," added Meeusen.
About Badger Meter
Badger Meter is a leading marketer and manufacturer of flow
measurement and control technology, developed both internally and with
other companies, as well as the leader in providing digital
connectivity to leading automatic meter reading technologies. Its
products are used to measure and control the flow of liquids in a
variety of applications.
Certain statements contained in this news release, as well as
other information provided from time to time by Badger Meter, Inc.
(the "Company") or its employees, may contain forward looking
statements that involve risks and uncertainties that could cause
actual results to differ materially from those in the forward looking
statements. The words "anticipate," "believe," "estimate," "expect,"
"think," "should" and "objective" or similar expressions are intended
to identify forward looking statements. All such forward looking
statements are based on the Company's then current views and
assumptions and involve risks and uncertainties that include, among
other things:
-- the continued shift in the Company's business from lower cost,
local read meters toward more expensive, value-added automatic
meter reading (AMR) systems;
-- the success or failure of newer Company products, including
the Orion(R) radio frequency AMR system, the absolute digital
encoder (ADE(TM)) and the Galaxy(R) fixed network AMR system;
-- 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, local 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 AMR
connectivity 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 housing starts in the United States and
overall industrial activity;
-- increases in the cost and/or availability of needed raw
materials and parts, including recent increases in the cost of
brass housings as a result of increases in the commodity
prices for copper and zinc at the supplier level and resin as
a result of increases in petroleum and natural gas prices;
-- the ability to shut down its French operations in an orderly
fashion and to maximize the value of the related assets;
-- changes in foreign economic conditions, particularly currency
fluctuations between the United States dollar and the euro;
-- the loss of certain single-source suppliers; and
-- changes in laws and regulations, particularly laws dealing
with the use of lead (which can be used in the manufacture of
certain meters incorporating brass housings) and Federal
Communications Commission rules affecting the use and/or
licensing of radio frequencies necessary for AMR 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 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.
Badger Meter company news is available 24 hours a day, on-line at:
http://www.badgermeter.com.
BADGER METER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve Months Ended December 31,
2006 2005
---------------- ---------------
(unaudited)
Net sales $229,754,000 $203,637,000
Gross margin $76,628,000 $73,419,000
Earnings from continuing operations $27,489,000 $25,664,000
before income taxes
Provision for income taxes $10,921,000 $9,500,000
Net earnings on continuing operations $16,568,000 $16,164,000
Loss from discontinued operations, ($9,020,000) ($2,911,000)
net of income taxes
Net earnings $7,548,000 $13,253,000
Earnings (loss) per share:
Basic from continuing operations $1.19 $1.20
Basic from discontinued operations ($0.65) ($0.22)
---------------- ---------------
Total basic $0.54 $0.98
Diluted from continuing operations $1.15 $1.15
Diluted from discontinued
operations ($0.63) ($0.20)
---------------- ---------------
Total diluted $0.52 $0.95
Shares used in computation of:
Basic 13,867,949 13,489,196
Diluted 14,388,854 14,022,197
Three Months Ended December 31,
2006 2005
---------------- ---------------
(unaudited) (unaudited)
Net sales $52,705,000 $48,643,000
Gross margin $17,123,000 $17,304,000
Earnings from continuing operations $4,534,000 $5,435,000
before income taxes
Provision for income taxes $2,201,000 $1,743,000
Net earnings on continuing operations $2,333,000 $3,692,000
Loss from discontinued operations, ($2,546,000) ($1,965,000)
net of income taxes
Net earnings (loss) ($213,000) $1,727,000
Earnings (loss) per share:
Basic from continuing operations $0.17 $0.27
Basic from discontinued operations ($0.19) ($0.14)
---------------- ---------------
Total basic ($0.02) $0.13
Diluted from continuing operations $0.16 $0.26
Diluted from discontinued
operations ($0.17) ($0.14)
---------------- ---------------
Total diluted ($0.01) $0.12
Shares used in computation of:
Basic 13,975,602 13,579,362
Diluted 14,460,672 14,155,544
BADGER METER, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
Assets
- -------------------------------------
December 31, December 31,
2006 2005
--------------- ---------------
(unaudited)
Cash $3,002,000 $3,215,000
Receivables 29,124,000 27,060,000
Inventories 33,290,000 27,349,000
Other current assets 7,068,000 5,614,000
Assets of discontinued operations 6,875,000 9,326,000
--------------- ---------------
Total current assets 79,359,000 72,564,000
Net property, plant and equipment 44,709,000 40,337,000
Prepaid pension 0 17,726,000
Other long-term assets 8,357,000 4,657,000
Assets of discontinued operations 0 4,003,000
Goodwill 6,958,000 6,580,000
--------------- ---------------
Total assets $139,383,000 $145,867,000
=============== ===============
Liabilities and Shareholders' Equity
- -------------------------------------
Short-term debt and current portion
long-term debt $17,037,000 $13,328,000
Payables 10,597,000 10,292,000
Accrued compensation and employee
benefits 6,181,000 5,962,000
Other liabilities 3,575,000 4,698,000
Liabilities of discontinued
operations 8,321,000 5,361,000
--------------- ---------------
Total current liabilities 45,711,000 39,641,000
Deferred income taxes 199,000 6,584,000
Long-term employee benefits and other 15,726,000 10,866,000
Long-term debt 5,928,000 15,360,000
Shareholders' equity 71,819,000 73,416,000
--------------- ---------------
Total liabilities and
shareholders' equity $139,383,000 $145,867,000
=============== ===============
CONTACT: Badger Meter, Inc.
Joan C. Zimmer, 414-371-5702