BMI - Earnings call 4 2023 | Badger Meter, Inc.

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Operator

Ladies and gentlemen, welcome to the Fourth 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.

Karen Bauer

Good morning, and thank you for joining the Badger Meter Fourth Quarter and Full Year 2023 Earnings Conference Call.

On the call with me today are Ken Bockhorst, Chairman, President and Chief Executive Officer; and Bob Wrocklage, Chief Financial Officer. related are and website. on release earnings slide available presentation our The

various the I'll reminding outlined On this call, metrics. made to harbor, the in financial call certain non-GAAP we and that subject Quickly, and safe today's statements our you press cover SEC which important most of any release forward-looking are will risks are to uncertainties, filings. during refer

the call GAAP that, Our to to financial earnings reconciliation slides With the provide metrics I'll of turn over a Ken. used. non-GAAP

Kenneth Bockhorst

Thanks, thank We all fourth headway modest joining capped us robust, operating and for off across order remained the our strong into trends share profit and results allowed Karen, to with cash continued you again and Demand conversion backlog. our flow earnings per make a call. record quarter metrics. sales, year manufacturing

after smart of network assets, our as year-end, previously and water offerings to we Unity Shortly the Telog monitoring suite announced. added acquiring

in for thank to about provide want I the I'll a the talk our later call. recap Badger year the in efforts all fantastic more acquisition, outlook of our employees year for discuss Meter. and their delivering of another

go For over it I'll Bob the to quarter. now, of details the to turn through

Robert Wrocklage

good everyone. and Ken, Thanks, morning,

Turning to Slide X.

to last million. the period total sales of new year. up expectations milestone at This above XX% million XXXX in our Our $XXX.X a in or fourth same specifically line $XXX.X brought sales year million, in exceeding million compared were quarter with $XXX.X sales XXXX the XX% our $XXX to million, full $XXX.X

full the quarter year-over-year XX% in same Total fourth utility water increased sales percentage a on basis. product and year line the

from water to innovative offerings. demand drivers, noted suite for have the of differentiated benefit utility all our solutions smart secular our of with coupled As growth performance year, continued underlying we

sales as into Ultrasonic In strong revenue. we AMI a BEACON meters and Software the Cellular higher demand, which on E-Series delivered ORION Service of cellular quarter, translated continuing endpoints,

to contributed the sales monitoring pressure and quality growth. top water Additionally, line

There few within full highlights year touch that the on. sales a growth to were I'd like

$XX year-over-year. Service XXXX, a as XX% in million revenues up Software First, exceeded

Our we of year-over-year, of beginning a acquired XX% than and XX%, international pro growth a small our sales also from integration adoption efforts. Syrinix, the which base. base, of from both broader utility revenue a XXXX, forma grew approximately small delivered more at albeit market early sign

of to a in And meters utility of increase in as American while variety metering again for percent leading North customers position our slight the fundamental of continuing sizes we ultrasonic reasons. of a command saw the a all units, mechanical penetration a for market meters

the to demand Sales basis grew with Turning deemphasized flow partially X% offset on in a year water-related solid instrumentation industrial markets. quarter general product sales modestly up were experienced the markets full line. by lower the in associated and with

to dollars XX.X% at Looking the and XX.X% XX.X% quarter and year. Gross point year-over-year in strong margin SEA in margin versus points and XX XX.X% record the continued percent a operating increased lines gross both as execution of profit contributed XXX to $XX.X increased the basis and year. increase at quarter, the in performance, last comparable a reaching basis sales million fourth margins versus last robust

our to durable of to personnel-related all which prior annual SEA remain sales support as levels quarter salaries such comparable dollar a with points and improvement. the higher in were amortization year million, we period. the overall the as structural year-over-year expenses favorable to yet SEA included costs of an the million water the the XX.X% mix higher related year-over-year, increase pleased led bonus fourth demonstrating solid The growth, in product gradual benefit asset smart volumes margins incentives. demonstrated Yet its and fourth have quarter basis from spend headcount, the in XX.X% mix of The addition of intangible Syrinix $X.X even to percent We gross contributed year, as within with higher portfolio. declined increase. XXX combination also with $XX.X inherent

balances, was the capital of compared representing Our was $X.XX a average full Incorporating as XX.X% we for prior improvement. cash in quarter consistent bit percent quarter, rate XX% Working income delivered effective with our $X.XX sales well a interest year EPS the rate higher tax to fourth of as prior the as the a on year-end. effective income tax that XX.X%. than at

with opportunities capital million Recognizing year Free overall increased a the working efficiency. inventory the flow a the dollars have working cash and While improved we on total capital in pleased ago $XX.X primarily was as forward. for higher improvement fourth we in earnings. we overall record from were growth, quarter support to move

to For million net cash call of at conversion Ken. free the full was year, flow free earnings record With at a over flow cash $XX.X that, I'll the with turn back XXX%.

Kenneth Bockhorst

Thanks, Bob.

water minutes storm applying water access X, form bring spend our source utility customers our recently talent smart applications. across capabilities. to The offerings in few and or assist Telog telemetry Turning the capabilities of wastewater, water to these our brings the the with in of additional monitoring to acquisition. monitoring on expertise with want Unity It tuck-in remote also to software, I a along brand units, Slide remote announced RTUs,

mounted monitoring enable flexible device hardware external add of for and utilizing interface a portfolio full or computing from as such a platform The a health, in monitor water devices level, analytical pressure range water and well pump Application examples decision-making. of and a more. flexibility depth water-stressed acquired pumping at secure that These seamlessly to quality, station flow, cloud pressure of devices are the to adds RTUs sensor a region tools aquifer integrations. certain a sensor For hydrant instruments a cellular-enabled monitoring. real-time an data-driven to at management, complementary dashboards and single suite suite GIS-centric edge flexible products robust software and products connect the for with example,

continue sales Meter's in range millions, in price differentiate in monitoring to in competitively believe of bolster modest the in offerings mid-single-digit suite our the purchase added capabilities full overall we Badger and growing these market. and solutions size network While with

to out for a Moving Badger Meter. X. on milestone finishing of bit a X of CEO me, as XXXX Slide the years represents

has and the During done tremendous evolving job a Meter Badger that great strategy. growth what on good time, into team a business developing our a and already one, advancing through was executing

water built the to We've our effectively direct building earned of call customer out evolution culture challenges network across continuous the partner on leveraging out base. suite nearly the We've efforts, to software. a metering, build our executed monitoring macro our years, and XXX trust First valued our more over advanced foremost, becoming solutions quality, address innovation We've improvement even tailorable and an to working really persistent to and of the across operations smart advanced of our across our targeted experts management ready management, leadership not water a team which industry. have facing water the more processes, record talent technologies, enterprise all I'd just excellence, company results. pricing on development smart water multiyear communication our but acquisitions enabled and business transition capital sustainability management sales to full and of

challenges. efforts performance in executing We've these of of distinguished displayed exceptionally well strategies by Slide our of are our face outcome a tangible here the macro The on X. multitude

XX form of aristocrat We've to exceeding basis annual ability flow of percent We've rate growth in XXX years a be sales at points with water to over $XXX over cash to of solutions. excess team's portfolio XX% revenue in couldn't X delivered earnings, consecutive of million. dividend as XXX% to as pre-COVID $XX free over profit enhance in return now our the our of XXXX, continue million net the innovation of reduced past in over further compounded our market, years, value-accretive I run CAGR proud intensity our software record achievements a our leader annual dividends, margins, in more For years. achieving the smart dividend past X shareholders with chain track inflation cash capital execute a the acquisitions sales increases. revenues in of status generated example, improved the And challenges. of We've our and enabling the XX% global grown total of reaching levels working we've despite XX% milestone supply rate. operating improvement consistently and to

I've Finally, as customers with the water turning macro level, X see resilient to our them growing X. address outlook. enabling more face efficient, a systems. At water next their been I'm sustainable challenges even years about excited adoption we about persistent to the more continue macro solutions the to and variety of be as past our

and business model revenues. real-time drivers adoption demand, proportion water of SaaS recurring replacement-driven durable is AMI underpinned and for need expanding information by secular growing a quality Our

customer sales inventory constructive of with growth. budgets along strong Our are supportive backlog, levels future and

top be linear math. from consistently to growth we've not Although growth larger is in This of rate law recent as of of is rate simply delivery. numbers expected line communicated, will levels moderation the and moderate

to and positioned Finally, upside, we're on modest anticipated capitalize well incremental opportunities meaningful, could while with provide potential not associated funding infrastructure them. be to

positive year-over-year. SEA leverage sales are structural demonstrated of drivers expected continuation The mix margin in and gradual improvement provide to our business

provide growth flow balance funnel priorities, allocation of debt-free investments. our capital capacity and inorganic with an and sheet execute Finally, including strategic us our generation organic ample attractive cash to

the and accomplishments their thank ahead. opportunities many want Meter XXXX, With for operator, team open again I on for to I forward please the and Badger the executing look entire questions. tremendous line to efforts that, in

Operator

first [Operator Jones from today Stifel. question Nathan comes from Instructions] Our

Nathan Jones

ahead should average couple that the outlook. last long-term that kind to kind Is significantly you clearly start should said you organic over off would see growth there anything years. just you've in running you I'll guess from rate, range single-digit XXXX we I that been with have XXXX? be the of the in guys on I of for the kind that questions the that of mean long few mid-single business expect term, meaningfully high of Or are deviate of outlook? that a

Kenneth Bockhorst

Yes. Thanks, Nathan.

that mid-single So in digits throughout the we we years we out, cycle. to that as few used a were back say strategic pointed you

We strategic with being on tremendous something mode, tailwinds. openly we and be interesting year strategic quarters the coming an in through into be certainly single provide that come that the know about talk is a for As was you or know, into still that still don't that We our provide past is amount either. the don't And or our year about. reinforcing and talking than XXXX, to and high I talk we so, positivity of everyone digits point it backlog, higher that into would excited XXXX. feel likes But backlog cycles. about coming guidance we're guidance pretty in we've we today the to for outlook been years. confident

strong So optimism still remains going forward.

Nathan Jones

that X start and I -- a maybe kind to that expectation guess next question of kind at digits I that then your outperformed follow-up years? the be we XXXX strategic the Because say, because you single years. mean is cycle high would over it of outlook Can from, different if from considerably looked the I is few the question then. say over last it a XXXX,

Kenneth Bockhorst

are to going including is past of that safe the Nathan, say Yes, Yes. not we performances of years. double-digit talking the about couple forward,

Nathan Jones

Great.

of support that's margins, on impact go incremental incremental growth one's helpful. outlook to that that, maybe the long-term like strategic or anything need we expectations might as XXXX And today? that think you incremental margins? where into sit make maybe I investments there does to any kind for the next cycle, are increased this or for over Bob,

Robert Wrocklage

Yes.

you historic say the It ahead modestly position. being zone. ourselves full line would our that think really as just talking right from much this about incrementals. both I in was happened at XX% and look QX so that. we're no of that So EBITDA We OP change if at the pretty year, But about that

moving So forward. no real change

Operator

comes next Bank. from Our question Andrew today Deutsche Krill from

Andrew Krill

do and I follow of was year-over-year, XX% SEA think, ask, sales I related of the a Was you your wanted think below which as going holding to any on percent it on that, the of sustain kind sales steady up dropped costs, just what other I impressive. question of incrementals lot you drive just a grew provide to can impressively? while you of that this? you to wanted And kind simply forward? sales kind costs can you helped color

Robert Wrocklage

Yes.

plan. So a not case, as single any doesn't does strategic make I year and year a quarter in a make mean, a

I would think a clearly, of think it as yes, had QX the sales. rate percent SEA lower about is, a I of way

whole. If you look at a as XXXX

expansion to percent over operating year-over-year. a for We're XXX That's as drive as SEA XXXX. improvement opportunity about Our based talk and profit EBITDA about was and would improvement XX.X%. of point I we say, leverage SEA business. an sales often a an basis as percent opportunity continuous

to is think many us would for to those able again, that. And with I something But say, we make the so expect sizing is that XX.X% as will And continue outlier year. business, But do. XX.X% get to our helped be improvements an us we not that aspects accrete we of to to would to strive year-over-year. I

Andrew Krill

I Okay. just monitoring there about Great. And release, noticed next, was and some text pressure press your growth. quality to water in then the new contributing

just or size of businesses how added kind can kind you dimensionalize those now of forward? big growth your [indiscernible] going So to rates are

Robert Wrocklage

if So we the businesses mean, for they year traditionally, acquisition first won't base, sort I those will. fold into after then size we about them. the of and talk you

to growing. I say, yes, comment they're think the specific purpose in is that

If do again, and the strategic that business. If starting all businesses you we that were about to utility pieces growing base, reported than growth growth those of much the think water digits. base part are size. a they're to, single-digit spoke single our of a high we think maybe high we take about line high as won't But single-digit those again, Ken smaller over from cycle, faster that

Karen Bauer

single High the digits. In

Robert Wrocklage

Yes.

Operator

Our Baird. Mason Rob next question today from from comes

Robert Mason

the you high you as Ken, digits, forward. single well as outlook in just -- framing go may

just that that around comment with a make anomalous as you well. we And did start as well. how out in we we as that? suppose think Or think forward, it here be You which that's curious in had linear, quarter year? is a to understand first fewer always to I'm saw just maybe the about standpoint, like there it -- days I should shipping from quarter fourth go called the won't anything about linearity the I

Robert Wrocklage

Yes.

$XXX obviously, long highlight would I QX delivered piece piece. sales, everybody term, -- the think we as nonlinearity a the during quarter there I'd the to is first about of XXXX, So ramp QX. million appreciates roughly The I think over to was the QX only

only the four. comp. thing easier QX And XXXX within quarter But an so I'd it's against about that's one is call

Robert Mason

would to finished should Okay. -- a with enter you a above thought, up like good it about had it capital Fair you of investment enough. I'm level level number, recent Also, at just for spending that's year, It go at 'XX history. bit up curious as that we year-over-year we that think the was sustain but was your down, how around level?

Kenneth Bockhorst

Yes.

is pretty basis, the still small. while So number year-over-year Rob, up on a it's

to anyone else think the in in I compare or if just it industry. industry you general

significant at increases not we've I So think and rate at, from are growth, we're capacity the in that about that continue a lines any today. investments make period where significant not we've some looking certain we'll I had to but at we're certainly where we're product in suspect we had would at

Robert Mason

Okay.

trying with about with think for to sales with on or you're touched Trimble, this assets that that you leverage just there Ken, you're question. last capabilities from with synergies the opportunities And Just to business come you bringing could speak new in you. overlay able sales that? that? go-to-market the maybe What about

Kenneth Bockhorst

sure. Yes, Yes.

while -- relatively pointed powerful. it's small. as said that, really again, out, it's So Having I

here where loggers out extension So we now is our quality. how we the And a years. integrate and into that We RTUs for then our road Bob Telog channels. is just pressure our water of just strategic example this utility of a mentioned with with pressure the business nice followed Syrinix and on been as sales another more really software. and that monitoring couple have And build before, map

more facility. in system the throughout really distribution excited points to we're bring a add or collection RTUs So wastewater a to

integrate won't difficult. won't to this that be be the So that ability

begun already we've it. working So through

understands of this sales to our quality integrated part partners, team with the make extremely We've takes really Syrinix. business. Our what been how it we've happy distribution water and

hit have to do with we we'll and a Telog. think model ground quickly this, I think I running the

Operator

[Operator next from Instructions] Connors today Ryan Northcoast question Our from comes Research.

Ryan Connors

Great.

you It's appreciated are really trying numbers to peers wanted First I And of I the clean stuff. to lot guys a on consider your to when think numbers impressive non-GAAP you resort particularly to success. again. a adjust your are don't lot that way your off, congratulate their of you

cleanly. it's were, questions to has question you of market, the -- to channel report going prior So to couple in to channels market on kind changed your my regard see But good way off, back to of first to approach at Ken? all, the

that know that changed is recently heard looking some a to very I a integrating those has forward aggressive the And there broader back and to back go channel. company down the to and just your territories. going actually few ago, certain was Badger footprint. one-off into perspective we've on years targeted distribution Are buying things? in talk you're Or third-party third-party vertically

Kenneth Bockhorst

Ryan, us and regular about of as cycles to come you've the is continuous we review about we and one where Yes. tweak the things know lot think business, a improvement talk I we required.

all. Our at because There's perhaps where particular a direct might cases up of are we distributor sense. changed a it picking where take other region sense. There country make certain strategy hasn't for more areas the makes things

overall our is tweaks. minor how at direct is much just through distribution sold much hasn't sold all. mix So how These are of versus changed

Ryan Connors

Got it.

on obviously, my was Okay. competitive environment. the other industry. And it's been very then noisy just And for time question a the

of been Badger chain your exceptionally of be some in maybe those well, while something, Meter really were there's than management had they aspect they tougher relative well I struggling for terms your forward know But is normalized, performed of things. of that whole going peers. that, competitors that will think to I supply when with peers a now some situation

new And shows whether a environment? comment lot curious wonder making has also of I in I'm comment if competitive press can what the there evolving. they're terms you competitive of had and about in I And landscape and doing. that Kamstrup out you getting the it's the trade a noise of on know just and lot So of terms any entry, the how been on

Kenneth Bockhorst

two So things.

As to a tie have competitor, us. most unique, offer portfolio that's plus a to that for to we the And again, a we lot better down they're ultrasonic, We to the lead they position continued I'm sure compares you whether we will others confident And the in expect, that whether offer, their and that supply whether be to every what portfolio advantage we've that the a the our doing, to with in spend drive broadest absolutely customers, can decade, plus know and get single meters how radios keep one been back. in of software is mechanical time and understanding thing maybe front that's together always how by cellular whole as best-in-class thing even never and defend. for slowed ours it's continue going. chains, continue best

bundle Then XXX growing monitoring, of quality, our have with add solutions Other of years that match portfolio our when our to come in tried to selling being water the you people to they can't in, able pressure portfolio region. and RTUs. just

We outperform. to positioned uniquely every feel to respect continue we So respect we every entrant competitor.

Ryan Connors

Well, of evident in it's on Yes. best the results, great 'XX congrats a luck. so

Operator

portion That hand now call. I'll any today's remarks. to concludes for over Karen Bauer the final Q&A of back

Karen Bauer

joining to you. Thank for our Thanks everyone call.

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

Operator

Badger QX Meter Call. joining for Earnings today's you XXXX Thank

now lines. may disconnect You your

Badger Meter (BMI) 26 Jan 242023 Q4 Earnings call transcript