BMI - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, welcome to the Second Quarter 2024 Badger Meter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is recorded. It's 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 Second Good

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

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

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

Kenneth Bockhorst

us market I'm $XXX delivering driven modestly earnings was We for our operating result Thanks, This in representing We of margins flow our with this revenue $XXX Karen. year-over-year growth. and second in million, pleased the surpassed reported year-over-year cash the report XX% ongoing higher incremental customers. record strong joining call. that EPS we million we quarterly anticipated, sales of backlog quarter, milestone growth. conversion along support quarter, appreciate by all total you to quarter demand than and of

of the sustainability I'll quarter, ahead, the our the report BlueEdge, to at Bob the go year. to point trajectory summary, to released I'll half of halfway we the back outlook with year, and over call and In the talk for of of recently Bob. results. Go remain pleased the back hand our business come through the about the details

Robert Wrocklage

everyone. Ken, Thanks, good morning, and

Slide to X. Turning

million last first line year-over-year, exceeded represented the second same XX% $XXX last product growth sales bit in compared moderating Total for million As of year. sales period quarter. $XXX million an Ken noted, increased at and water a mark the to the from XX% utility quarter in time $XXX increase total our the XX%

suite to both of secular of innovative related continued demand, endpoints meters, Ultrasonic, strong our sale and able Software-as-a-Service BEACON benefit our for from water drivers, mechanical we Most additional customers. solutions on ORION backlog support make delivered to into utility of higher Demand were including smart cellular AMI growth E-Series headway we Cellular revenue. notably, underlying and in and

flow solid Sales markets for line water-related within trends such focused the X% as wastewater. product instrumentation increased with our order globally

of over As high into of in rate noted normalize and as the consistently press or to sales in we from we the single-digit with and anticipate the release cycle, typical year. outcome and a we've the growth year particular back half unevenness range communicated, the the quarter any that

the strong book. XXXX, opportunity of bid which do quarter benefited -- moving But of lines influence we second funnel we the trend backlog back second level conversion, have pipeline, We benefited which do level not specifically for will will then half forward. obviously anticipate sequential not and conversion, the the backlog quarter, anticipate which a order of the

margins. to Turning

$XX.X of the in X high have normalized in gross margin resiliency gross are above steadily held floor since XX.X%. and stability for We of demonstrating upper half been of note, the XX% in Gross of inflationary quarter, percent for face other of profit range expansion XX.X% with macro Of our XXX a XX% sales, pressures. dollars of quarters, basis margins XXXX second record have and pleased reaching margins million as points very operating remained margins the the at last and year-over-year, the to a of increased the and a the quarter.

$X Despite quarter growth R&D. to to the up personnel-related a and quarter. approximately spending, was prior The $X spending XX.X% million, from commissions XX.X% $XX.X higher of the year-over-year SEA million year primarily in points the declined over in to just increase in year-over-year due expenses an first increase percent SEA were million of comparable XXX due and from headcount, as second the quarter salaries, basis costs, increase backlog sales this including sales sales. enhanced

The quarter the the of XX.X% was from from provision discrete XXXX $X.XX the second prior due below XX% comparable tax of EPS the was income the and quarter XXXX, consolidated was tax in in In improvement transactions. partially year's $X.XX XX.X% benefit compensation year equity a quarter. to prior in summary, second

percent a prior end was XXXX, as consistent capital at XX, working calendar from June and XX.X% XX.X%, quarter with at point XX improvement of the Primary a year-end. sales basis

Free working manage support carefully than higher $XX.X earnings. result growth. higher year's of prior of investments $XX.X to to the flow million, continue We cash capital the million was largely

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

Kenneth Bockhorst

Bob. Thanks,

X. a to minutes Turning you few I'll to to Slide take BlueEdge. introduce

integrating to For customers of you representation of literal on and at make that efficient our booth those show, by you BlueEdge more for year's ACE hardware-enabled It services and of technologies, gain software trade informed stopped management. saw the for decisions showcased our suite this full clarity connected water display.

challenges needs don't to segment, is future. they many utility offerings a name we've way cycle. meet solutions the the overarching of is to Instead, our and so our product customers, breadth the that BlueEdge new entire BlueEdges a you ask the visit next we water tailorable commercial in website for badgermeter.com today and BlueEdge how not suite preferences quarter. available more. customers, I advance of both plan us encourage It's solve our critical and and to change to please across simplify or to given and sell water learn their best including industrial as to

role and resiliency, water-related life we more enabling loss revenue XX% water here May, With released water and Slide with risks mitigating focuses enabling on our end efficiency The report costs. on ESG our summary the customer-driven sustainability sustainability crucial customers. asset our of annual and outcomes, a in we than X. derived from reducing play reducing optimizing a for report At of applications,

water lowering our waste turn, in usage limit by environmental costs. also strive own impact We to emissions, and our reducing energy, and

long-term furthering know the we attracting and innovation the retaining to motivated grow provided value-enhancing working by into and ensure the business critical our and linkage longevity of future. careers our engaged supporting and are talent purpose financial sustainability-related between By that prioritizing growth. to well we are outcomes, opportunities our to their Finally,

turning and an Finally, and boding the continued really book to bid outlook. There water is pipeline macro to opportunity no favorable growth. growth the change with supporting funnel, for order drivers well sales earnings multiple fundamentals the industry encouraging

the in moving forward. our which support our Bob's revenue customers, quarter second comments, did As converting impact release sequential from expectations we noted in of backlog of earlier press and some the benefit will

growth is sales account general year. Our unevenness in high rates year-over-year taking half single-digit comparisons difficult back into the and the on the of more focus sales

flow also provide attractive us cash further capacity flexibility growth providing generation invest We dividend. have balance the inorganic to with in both organic an and strategic sheet while to significant and and highly

from solutions. feedback the innovative and experts summary, at ACE and constructive received we preference the for In customers and industry our both reinforced backdrop differentiated other their industry

aligned team remains and ahead. the excited opportunities about Our

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

Operator

[Operator Instructions]

today Stifel. question comes Nathan first Our Jones with from

Nathan Jones

think kind about guess of the second a ever back guys target start talked high the you the year. don't more single-digit about years targets, long-term I of year. of I the I the half target question specific given you've have but off mean half for in over the I'll with a

the quarter. manage conversion So backlog in the to expectations with second clearly, here trying

to talk can that the off the think just a the question as quarter of a So of is, I run should what was? kind we contribution guess Xx a second what is? you in backlog kind second headwind rate half about of And of burn

Kenneth Bockhorst

all. will something year-over-year positive just I'm a we're Yes, Nathan, year. I'll heading at to we here outlook have the comps fundamentally, go hasn't Bob think into this. markets period here, first But have changed on additional each add get sure are stronger and on -- where the that I the

year, last were think up up previous year, XX%. I we XX% the in QX

difficult. just comps idea And the uneven he larger than shaking always an so head past the yes. start have products customers us. next. terms And No every and deliver don't agrees, thinking sequentially business of returning about we in want in I we've more people his quarter from okay. been just to Bob's meaning our did is of must to want the So the when And get no,

Nathan Jones

I it. got

couple we're well have guided as level, back I lower? higher I expected XX% about think incrementals. organic higher over that here organic saying is a mean mid-XXs historically, incrementals that we if which the to period you the -- last higher of growth. get of normalize quarters down hit obviously, incremental to of the of that more kind and mid-XXs should you guys I the over kind is talking should on growth more level expect Do of historically last think have margins or than kind

that. you thoughts any Just have around

Robert Wrocklage

incrementals I would Nathan, our to say are. we fundamental no say what shift, normal

then diagnosis the pace of really You're in quarters exactly growth with the that. investment X the and of the last than being slower right modestly growth robust

you're our X to above reasons. just recent byproduct course, been And mid-XXs. operating those happens and It incremental real then change is EBITDA the have most Of a of that leverage. course, But margin margins. getting that no so the the quarters for

Nathan Jones

BlueEdge's could on to market to I of with asking you marketing Okay. to how technologies broader selling that maybe to increase this technologies think increase of ability leverageable a suite terms this kind little one to BlueEdge revenue? sell. more additional of do just suite without that you're leverage platform let share? market these more be in that of slide putting How going of a the about of many technologies generate you Does leverage or technologies I'll in guess and suite revenue, going

Kenneth Bockhorst

Yes.

there. on exactly the you're So right path

quality throughout customers So is bringing RTUs, with the And can water on obviously, monitoring, the the system. Telog meter. s::can, clearly years the a about beyond that gone full last way and extensibility BlueEdge the and the their we brand into Syrinix ATi network pipeline over for to this with talk provide we've platform us for entree X with

with to could through the that things. and or adding a and already rest So that in it it's they us or then we've haven't acquisitions similar use bring the talk if to a been acquired our someone's they platform customer comprehensive, a by BEACON we customer through organization the of the one customer, vice a distributors those they for the through our across place if have metering way put customers metering sensors XX that years, software versa, easy been now of portfolio about

-- of it's where it's the and enable journey them for their products. way our goals to sell nice how and can we in out they more technology figure their a are So us meet customer meet just really to

Operator

with next question Our from Deutsche comes Andrew Bank. Krill

Andrew Krill

to lot capital a of demand. know Last slightly this at the the government quarter, indirect water utilities. I at noted water freeing with was helping related U.S. was the up was stimulus it by margin

U.S. hands on with? this? guess, customers, all, use election could air perhaps the update any And in or such there these discussions XQ? there your to through contend be after Has it pocket also, So until I ahead scrambling of at there of are more changed the therefore, sitting any is on dynamics bit funds just at accelerated with play to maybe the election, perhaps little and an a as like

Kenneth Bockhorst

Yes.

the Andrew, of our what's the our execute I growth recall fund our been about -- been it said exactly driver by last the But the about funds. for and the the we So quarter. aided what of fundamentals The that of to several been portfolio that virtually any the consistent market thing drivers, that years on has macro ability don't of growth. none team's in is happening has last one infrastructure has the

growth. think about do think be and the think some in could these we future water of other the pockets there start goodness to if bring, we of cycles funds what we really for need and our that come As when areas, some but we through, and don't quality some election of can

pretty So air a good burst. that have been have don't we're that any air not it expecting puts us, we I position think, that. pockets Therefore, created by in to pockets

Robert Wrocklage

effect. of was your fringes exactly It on more fringes, you in generally question think is what key I the stated. part the extreme indirect the and terms of

So I would real of things are. And delta quarter-to-quarter. where say that's kind no

Andrew Krill

I helpful. back being a that be I this from your a bit keeps range perhaps an it's pulse we the as think in at That's just expecting movements very on. the you of XX% in less Great. little gross you Should pressure maybe to the get that then for XX% of question, over And but wanted on has input, the just important time And less to and it be been target over and high to guys, copper margin half time? Okay. end you become as think topic. a and second hot

Robert Wrocklage

of copper, things But a impact to second peaks I which, that be drivers gross and focused. Yes. one you if lower we point, that's the copper aren't sell mean items there's course, beyond less year that of than of copper mid-May. pricing, the you category. so it's quarter and more of margin the fact key XX% a as quoted just continue average, ago. a that of higher of highlighted less an XXXX, and quarter-over-quarter, than just headwind the clearly, our looked it's we obviously as lot at of Thankfully, bit would were it's absolutely, But on side the a more

you And performance, tight I margin we that piece in to things. been last whether the resolved band. be X other as still of ultimately, markets inflation And inflationary remain a things, would pressures a is our quite as In gross at range. read, we But whether but be noted frankly, script, that there's quarters system, copper, But variety copper cost definitely, a look expect normalized pressure. of other to the in energy the still the transportation, that improving, to addition continue. and in certainly, we is think we've if that pretty

Operator

Our is Rob next Baird. from question with Mason

Robert Mason

for to digit. assume back the of kind backlog go high to that or your single around you digit so further? I'm the conversion down is that curious wanted the just the backlog single year, within level just commentary have of I that the visibility of does focus half what comes back around high

Kenneth Bockhorst

Yes.

know, really have never still So what backlog. order sized of we in as it the the rates I characterize as excited would about what And the we're level backlog. we have you and

fundamentally in really So on I that. anything view don't that changes our think

Robert Mason

had Sure. been business. mean you I the resident mentioned in Ken, earlier, this and has always

at I'm bit higher XX% your You just or whether when than clip revenue your historical. a single this little And is over time, them. largely ship growing digit. need That But high product viewed How of your replacement a as the or customers is that curious, that is few meters models deployment have time they business or utility be or support that existing the in kind well. years to as maybe pace. able replacing last are to customers adopted their staffing radios over adapted a

Kenneth Bockhorst

Yes.

-- everything or that's talk question So is not we yes many standard. answer so times, like there's any as and no about no to

a the companies utilities and installations see, for of the I used or working still is many less that are us trying to you people that's So to staff cases, lot in when have up, think, for have you fundamentally, themselves do much. more still more driver that's a installation where of aging or utilities so adopting lot a technology stable and one things people been this of workforce, huge why

each I So reacting, can answer give you a is but... utility think again, just how of don't standard I

Robert Wrocklage

we with those a elongation do in of your replacement. X the I standard full years, what shortages, X think precisely more X, about to seen haven't years. not and over labor say, the maybe generalized system be we to we've this X, deployment X, is hits could Generally, tend again, as all talked close but last question, an

such So place been kept labor not the deployment an we're be be has in that extension to able of seeing schedules. to

which I point of making sales, our Ken is we to sales the competitors. direct when than on our think different channel our the is dependency high maybe deliver is customers

brings quarter to This happens about game. others. what not is often project an uneven most degree is we direct some this the so default side. more a this relationship, favorable a And distribution that so in of much which had miss just by unevenness that's And recent so than the then talk creates a very schedules

Robert Mason

Yes.

Kenneth Bockhorst

Bob first. let go should I

Robert Mason

question. last just conclude, Well, to your

the you amount, a expenses, margin in was step more SEA fair this did at second your that for sequentially half commented, in expansion in they outlook onetime up suggest the second your level, that interpretation? fair nature Or of a quarter? operating kind as there of is modest year stay So the anything

Robert Wrocklage

Yes.

to which a that to believe improvement. comment. that market and organically grow position forward. on is our Absolutely, us to that We differentiating continue we at slower year comment an for a to year-over-year the full comment sequential, comment rate really year-over-year be you can not But excuse business. and we the an just than line, full operating business the think and a on I lever do specifically the the continues innovative that latched that in through year. you invests investing moving in top latched to on can sequential company we more continue That's modest being be me, --

Operator

questions the [Operator in Instructions] further We queue. have no

comments. Karen, call you, So for closing to I'll turn any the over back

Karen Bauer

our you, Thank joining operator, and Great. for today. thanks, everyone, call

For call XX. tentatively is take be to around scheduled quarter weekend. questions. purposes, any follow-up Have third for planning our good I'll day your October a all

Operator

for concludes today's you joining. call. This Thank

now lines. disconnect You may your

Badger Meter (BMI) 19 Jul 242024 Q2 Earnings call transcript