Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, welcome to the First Quarter 2023 Badger Meter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

It is now my pleasure to turn the conference over to Karen Bauer, Vice President of Investor Relations, Corporate Strategy and Treasurer. Please go ahead, Ms. Bauer.

Karen Bauer

you conference the call. thank quarter Meter and earnings XXXX morning, for Badger joining first Good

Bob Officer. On Ken and and Bockhorst, call Chairman, Chief the with President Chief me Executive today are Wrocklage, Financial Officer;

our The earnings slide related release website. available presentation are and on

Quickly, and harbor, you uncertainties, outlined important which forward-looking the the that are subject in safe this are release filings. made most during call cover and our to I any will reminding statements various SEC press risks of

we to refer financial call, non-GAAP today's On will metrics. certain

earnings non-GAAP slides provide GAAP Our a reconciliation financial the of to metrics used.

will call With turn that, to I the over Ken.

Ken Bockhorst

Karen, joining for our thank call. earnings Thanks, and first you quarter

yet team improved, and performance off record continuing profit gross delivering from another Badger year continuing ratio. achieving both expansion and started Operating profit positive of Meter benefiting profit book-to-bill margin XXXX, SEA the exceptional margin revenue leverage. The still expense the while

Syrinix leak about smart the acquisition. pressure We're the scalable in offerings, completed and adding integration progress customers we're monitoring the early broad views our reinforcing the our expanded acquisition, complementary nature to and discussions acoustic the having and water with of capabilities the with we quarter, our pleased Early on solutions. detection

and macroenvironment to but call later over the I'll go of quarter. update on to through I'll turn provide an the in call, Bob now, the outlook for the the details

Bob Wrocklage

everyone. good and Ken, morning, Thanks,

X. Slide to Turning

compared to an million quarter sales quarter representing an Badger sales $XXX.X first were of the the Our for XX% in the million, last record total same $XXX in all-time year, period Meter. increase

sales ongoing higher endpoint improving cellular associated continued product supply XX% AMI orders and utility Service strong sequentially shipments continued. demand, as and we price adoption, water as Strong increased experienced sales line including a Software Cellular utility realization. Total chain BEACON ORION dynamics and with order year-over-year,

applications. increased saw meters, residential of in we and meters E-Series sales including Ultrasonic commercial Additionally,

record utility was with top-line the strong quarter, the environment water for another even impact performance. full Syrinix backlog sales the while demand Finally, resulted relatively The quarter. in exiting the small, record were included sales

instrumentation by an product availability. flow emphasis improved markets. general in Sales strong led component line applications for water XX% year-over-year, were related exceptional end water trends outperforming demand our increased with Order the industrial on related markets supply and solid

Turning to margins.

pleased including very to expansion the profit margin quarter, points higher XX.X%, are higher Gross with points of of leverage of sales, the off $XX our revenues, the the We drove XXX the spend expansion value-based a basis improvement. contributing of at pricing some and margin XXX volumes, million favorable both improved higher of basis continuing mix, operating percent with end combination cost SEA to improvement. SaaS range. dollars in The and, and as normalized inflation year-over-year, increased gross input leveling

$X to levels from of $XX.X XX.X% the travel. XX.X% addition would we the support leverage the quarter Note modestly SEA historically first year. Despite to approximately expenses were SEA increase of that personnel an salaries, contributed first of in in sequential end expect on basis higher be leverage improved the as of and growth, to percent prior-year declined a XX comparable the sales SEA the in for points quarter. including tends year-over-year, its remainder costs, the million, to with due primarily the increase. also intangible commissions to asset higher and The related amortization Syrinix headcount, higher related spend quarter million sales

banking makeup with partners with concerns. with partners, our we've anticipate not the noted our troubled not and named of no do return income balance, the are our on the With asset question related data and the primary involved as in banks, of To and line. are any banking cash rates, any higher -- have strength topical debt, seeing some interest we we we other on interest address reviewed

first quarter XX.X% in the in compared comparable to quarter. income of provision the The XX.X% XXXX prior-year was tax

robust In comparable EPS improvement $X.XX in $X.XX, the quarter. from prior-year a XX% summary, was consolidated

of sales the end, comparable XXX increase from as a still record a XX.X% Working was basis but capital XX.X%, prior-year low percent improved period. at XX.X% in point from calendar year the

capital to to increase support While growth, did investments. strategic carefully working inventory and customer manage continue we payments

and year quarter. Free in cash was results and contributions made typical improved from in million with $XX.X flow of earnings incentive earned primarily the those seasonality on strong based and the XXXX first a on higher ago, reflects plan then compensation retirement

call With back the Ken. that, over to I'll turn over

Ken Bockhorst

Bob. Thanks,

we funnel to about winning digital our for ahead. position customer confident excited With robust growth. water sustainable a record and smart that outlook, backlog, remain our the opportunities exceptional of solutions Turning us and bid I continued support pacing, strong well remain order portfolio

no the that consternation seen environment higher To-date, customer impact are evidence interest or an having rate sector banking the on budgets. we've

in with markets. an and radio any software volumes new limited commercial or meter level addition, XX% In very of being recurring replacement we moderation volumes impact from driven, construction replacement residential of increasing expect potential revenue,

we sequential with in the chain by moderation dynamics. gradual encouraged and leverage, value-based also in cost Coupled expect to continued margin improvement operating input XXXX. of continue in rate SEA the I'm pricing supply inflation, improvement

acquisition-enabled strong on debt-free flow to growth. generation and overall cash capacity ample free balance invest both further us with in cash organic Our sheet hand, provide and

were of first Companies. proud be XXX one the time Sustainable as Barron's we to Finally, Most for named

business and by and We world long that it the our demonstrates grow customers impact our our the both to to enabling in is performance. positive possible deliver a type of This same. have financial recognition strong sustainability of to history working do

In our want thank and I to for our customers. their team serving ongoing commitment closing, efforts in

for line please operator, questions. that, With the open

Operator

first question [Operator The of Certainly. Jones proceed. comes Stifel. Nathan Please of line from the Instructions]

Nathan Jones

morning, everyone. Good

Ken Bockhorst

Nathan. Hi,

Karen Bauer

Hi, Nathan.

Bob Wrocklage

Nathan. morning, Good

Nathan Jones

start chain. supply just -- going a to to question want around with Just

throughput, today? remarks with positive or problem to year, and before COVID? in back where still was you where it compared your Can was now pretty the utilization to, think, prepared talk you is it in last commentary, release morning. it chain supply I this press in Some where about of kind capacity just Is say, normal a XXXX

Ken Bockhorst

Yeah.

this best been we've still time chain. reliability, We're ever challenging certainly So, chain since supply was COVID. throughout back that as entire talked pre-COVID position to not in supply but we're we've the

So, XXXX and certainly at seen. and difficult was a the is to year, that started difficult. end XXXX bit the improve we've remained QX of best extremely the extremely

didn't year, first is pre-COVID levels. We challenges the there'll hard of thought intermittent think still we back in doesn't And again Now some the the to was the the predict, that some will be that that think that then, to going we've towards be way have output, challenges do improving. perhaps it of limited still that out that some mean seeing perhaps but year, it but we're but half to overall, play back we way still half it. the

Nathan Jones

bit a to by still in end right? Fingers crossed, of Are be delivery that like have been the 'XX. and below maybe past would due And you where on-time level XXXX? to it back sounds metrics backlog little hoping like

Ken Bockhorst

Yeah.

I to progress to So, also expectations on-time but high bar than is definitely we due we leads have as expect And of a then in that lower efficiency past supply be for improve, throughput, better chain coming those very which yes, and making see higher, is and they're forward. some areas we we'll ourselves delivery and start on-time think -- in backlog. past delivery admittedly due backlog

Nathan Jones

get XXXX, the you record Or of end it to result backlog there is stay backlog Let's very it's -- that say should supply how of obviously the up meaningful strong? is back Or whether kind to backlog is -- get of of as for trying high. that if hypothetically a still consistently to improving? a Just are to normal down? work going that's something or chains worked going supply much are amount chains sense by of that's of more a down, the

Ken Bockhorst

Yeah.

a many with multi-variable So, situation. as things, it's

a is of years supply caused chain backlog. the positive to so a of has demand with bit it as is adoption, larger selling has be now talked because later now backlog growing the been we've hot very radios so perhaps we're side There portion inflated meters. some about technology in things for So, and

be by sell a price going to the definition, the of backlog be just bundle. of average is than it pure So because used to higher

still I supply after we operational think chain to the it the will elevated think going pre-COVID, we're I versus So, at elevated where but into through get normalize certainly future an challenges. it's continue rate beyond

Nathan Jones

Great. get back I'll queue. questions. the for in taking Thanks

Ken Bockhorst

You bet. Thanks.

Operator

next comes from The Ryan Northcoast you. Connors Thank question proceed. of Research. Please

Ryan Connors

to morning. my congrats questions, number. Good another the and on team for Thanks great taking

Ken Bockhorst

Yeah. Hi, Ryan. Thanks.

Karen Bauer

Ryan. Hi,

Ryan Connors

So, first was question sure. my just on --

Are price any you volume. First able that just hear there. provide I question kind regard? versus but didn't I apologize any it, to top-line was breakdown of in missed on breakdown on I if

Ken Bockhorst

Yeah.

that, quite certainly So, it than disclosed driven but is we it volume more much is price. haven't

Ryan Connors

my then, was, numbers question I great Okay. had other mentioned, And you've here. as

Is you participating that? otherwise. to it factors just on do you're view share? would made just there, kind boats? good really think, some bets some lifting I And for last break anything the year plus. taking peers Or And is relative systemic outperforming trying down certainly here You've technology your been, your believe all or be on you're cellular that in the of that comment because the that you've markets more in on contributions actually what with and going that's your

Ken Bockhorst

Yeah.

carry them significantly approach most you maintain our generally claims and period we and share. an throughout backlog. I clearly think, if have and away But competitors, about Midwest I from performed taking elevated we humble also usually at the So, this shy than look making think of delivered, more

the So, the AMI if believe, for been tell XX% package approach with within and I I several areas share with on will when changing, I market extremely we that you I is taking in look the being of believe on certainly, AMI software space. the taking on in Ultrasonic software. the continued can views growth, the think first CAGR I comes where last best-in-class that -- we've -- confidently way the Coupled do us. Being years, that our the has outsized value the over some are at AMI our will, side. that, and it, seen share cellular yes, you lead you beneficial the

Ryan Connors

coming my lot question know that what sort is -- order, visibility you through? actually visibility. seeing the the where to kind but strength funding perfect of on federal of local flowing strength? coming the your And a I sense don't money comments be. seems relative mean, municipal then, about organic that's the is some funding driving Yeah, of just every the on last is funding of through, from kind was contribution or I have any that is of this is this it finally driving the of today we're

Ken Bockhorst

mean, couple period these water with we years, grow. quality Yeah, And little Yeah, the of have through that pretty been with for infrastructure throughout we've to around that that. will fundamentals, did there, uplift passed, it's infrastructure that drivers I acquisition money the bill the you that we no consistent now tell seen we've we didn't to asking from macroeconomic this need whether since thanks entire the the I bill. that AMI, was

Ryan Connors

it. Got

Okay...

Ken Bockhorst

driven So, [indiscernible]. it's Yeah. No, all go organically ahead.

Ryan Connors

Just what a few be the quick mentioned am for Can these specific, curious to call you just a out are? exactly markets. related housekeeping you're flow instrumentation, there. what In you Bob. water just just of those I referring

Bob Wrocklage

Yeah.

from last following over the the years, that away water-wastewater markets of some more industrial the general strategy now HVAC. few focused on buildings sustainability So, we've and pivoted

to up markets, we in And market say, saw year-over-year, general those average lines the those is. lesser we more just growth industrial, water-related in about the still versus, And that's so, when or quarter, but focus where extent. in -- focuses which talk our a were above-line

So, building really water-wastewater. talking about we're sustainability

Ken Bockhorst

in the I are specifically other we related if water call remind about ones that And activities. doing just markets, we're when even still water related are you talk markets. we generally markets those the that those out that Yeah. could It's

Ryan Connors

today. Got for your Thanks it. time

Ken Bockhorst

you. Thank

Operator

Thank you. Rob The Please next question Baird. Mason with comes from proceed.

Rob Mason

morning. good Yes,

first The quarter...

Ken Bockhorst

Good Rob. morning,

Rob Mason

quarter good Your -- Ken. first revenue morning,

up, of versus revenue contributor. in previously spoken that's that probably see Or high already projects you chain good step-up about flowing second and a some those you the Is Are getting benefits first is capacity expansions the a progress? pretty to through? still quarter from ongoing. those? half we -- starting Your step had That's But that would better. kind size identified supply digit was single be

Ken Bockhorst

Yeah.

the obviously, from investments revenue the course So, the are sans very investment last the you any did early of XXXX. quarter we We saw was the benefit signal in stage. would that that basically those capacity growth first over say

bearing first in quarter the while is of seeing oriented the elevated it's quarter. the CapEx not some capacity is that's what and So, you're that toward in there expansion, fruits in

Rob Mason

actions trying contribute what that How if you've how did I'm your resident is the pricing actions, maybe to that quarter to did And maybe clear -- maybe 'XX first question historical fourth how you? are quarter? to is those the taken understand those perhaps versus the backlog, in in

Ken Bockhorst

then, take model, that it's at Yeah, started Bob think to But hit. if Rob. basis. XXXX pricing the from beginning. to that went of we it, away list shot a much I backlog. well, let ongoing AMI you dynamic that And you'd see what of anything through think, we will don't It's when and do pricing growth and our something on me we model, up value-based a the annual maybe used in with in clean an some I increase nature price what more be the project-based transitioned of the We the more about come

Bob, know, that in much QX think of I huge step-up a my it's -- So, But is there QX, don't not price change. view, you... I versus

Bob Wrocklage

because talk impact, you're referring price also sell evolution for described. certainly untangling mean, but combined average to, the challenging, the when Rob, not with I that initiatives Yeah. pricing it's we traditional only bit list becomes price a value-based about this increase Ken us price price

So, us. there is price an benefit the in impact quarter, to that's of a

had while portion would of the unit mentioned What the as to share there a Ryan earlier, is dollars wise the And growth. element. asked, a increase it's say, the of parse or dollars price largest driven. benefit is typically that year-over-year is Ken in we don't in of certainly, out attributing volume minority As and percentage percentage we each

Rob Mason

year? way Would is look favorable, mix to be it same your versus impact it favorable, this less you there as the should more at you stands If 'XX? how assess backlog a today,

Ken Bockhorst

Yeah.

a -- our We of very to and clearly press around the that always structural confident continues release, excitement view health line confidence positive ability obviously, So, we're our we backlog a have time when with about on and that that our starts be product our our same commentary that keep we in change margin be in where resiliency, in lot our talk have, when we margin do again resilient through, or any the the the good having that's we mix talk through about which ongoing. in to we period, the at of analytics backlog.

Bob Wrocklage

Yeah.

specifically XX%. the in trying leverage range to to trying toward specifically drive reinforce toward guess, I revenues we you're if universal a continue think normalized I as of would you're to XX% of I gross drive just -- if SEA to Certainly, our to margin, grow. believe messaging ability

and margin And EBITDA is so, those expansion to come through going margin op two.

from XXXX oversized leverage I will from think SEA the impact more in be will be from it -- margin contribution. gross than

Rob Mason

helpful. one Understood. think product portfolio you've sales need will comparatively slot we versus your that to into into other initial the the if it's have that but impressions you ownership, know Just early your question should quickly. Ken, I think just Very channel just how any products work to under you how curious inorganically Syrinix. Maybe there? added last about you I'm maybe noted around and uptake channel?

Ken Bockhorst

Yeah.

from in channel reaction base, very we've partners. mind but positive a from keeping So, our small that had extremely it's starting

our that feeling know sell distributors immediately how been of many about to already have. this to like have we great utility they positive customers So, really long-standing

mind, talked good. leverage, we before, sometimes certainly a excitement get lot there's about as do, So it it but information that's usually market. a But a viewed of is as a within for Syrinix, keep to industry, we water around real-time not because us how it's takes lot thing, doing and with to but And AMI case it. we've do and deals we're the within talk the center not when in are the about of closer bad the the very but what small, small it's while

the that you leverage thing now which we're if now Syrinix take all valuable. and BEACON the ATi, other with our and excited quality And the opportunity was built really fully-developed to our water on about can AMI, platform, something very s::can acquired platform, acquired is now that software are we is giving The utilities in information. we that software since finding monitor those we're -- which RADAR customers Syrinix with now in one we of now that three software Syrinix,

Rob Mason

Thank you. Very good.

Ken Bockhorst

Thanks, Rob.

Operator

Thank the Please comes Tate you. next Maxim And Sullivan of question proceed. from Group.

Tate Sullivan

Ken, sticking monitoring, process, the quality it most from meters utilities, real-time you. customers utility for demand is time the selling or is in up water with when it sales a are Thank U.S. that constant the of for for replacement you're please?

Ken Bockhorst

into it's that No, constant process, the with concerns selling similar a budgeting to budget other out to things tend utilities and future.

selling independently. water team team utility quality is quality the sales So, there out is sales business. jointly the selling The with water

thing. ongoing an it's So,

Tate Sullivan

mean, since -- in their from hearing still when And and what just I they you're about do quality been I then, are just mean, you their want I infrastructure? worried meaningfully? are -- with -- water are systems your about comment do they -- water can they still mean, your they customers, -- customers? XXXX And on it's worried quality

Ken Bockhorst

Yeah, being I but that water, so quality that were about the people nature provide just just on-demand think s::can news, on news and open we to news you concerned and information. on don't of because look online anymore, their about the real-time, grow the ATi any and guess people and in why the water ability that's I what's to excited continues much if newspapers on turn high-tech

is certainly why it, people are we and to get interest that in interested view we growing, So, really that as which space. into want

Tate Sullivan

remarks think going is the I meters? meters mentioned your levels. more in replacement cycle ultrasonic field? replacement radio ultrasonic for the were When And first you in when those prepared start meter then, And your to

Ken Bockhorst

Yeah.

I the making on answer question think meter I'll but I your that point was radios, So, was first.

-- that meters or they'd So, annual ultrasonic, volume. about replacement be are in meters, XX% that's whether mechanical

now see over market a they've in is exciting the XX get takes It have now speaking the same there out the be What to the AMI the more years. get deployed, the volume roughly you long right? if field. radios going radio you And replacement But time, radios time, going products drive-by once the saturation to been in because volume you're to think to radio as the replacement XX% years. same are on long-cycle in and market. XX about these full I more is XX that was been radios,

a volume nature So, every that's replacement year, level we of because the higher business. in just radios of the see

Tate Sullivan

Okay. Thank you very much.

Ken Bockhorst

welcome. And you're Yeah.

Operator

registered at no you. questions There additional Thank are this time. currently

the will closing conference So, pass Bauer I over for Ms. remarks. back to

Karen Bauer

Great. for call you today. you, all joining operator, thank Thank our and

planning your all scheduled call questions follow-up quarter our have. purposes, be XXXX you For XX. around July second to might tentatively is day. I'll for Thanks. any a great take day Have

Operator

that, we will today's with participating. you for conclude call. Thank And

now your may You disconnect lines.

Badger Meter (BMI) 20 Apr 232023 Q1 Earnings call transcript