BMI - Earnings call transcript Q3 2024

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Operator

Ladies and gentlemen, welcome to the Third Quarter 2024 Badger Meter Earnings Conference Call. [Operator Instructions] 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

Good morning, and thank you for joining the Badger Meter Third Quarter 2024 Earnings Conference Call.

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

Senior great know investor XXXX. retire years transition strategy the sustainability after to she to Also Noverini, will and Annual together Shareholder I relations, today a over call the countdown ahead. our I made Director spring will in new to working the of have I seamlessly to my call activities, you to be go joining months to last and Relations. and X of after resource the next decision in company is the earnings and the X all with today. Meeting Investor begins Barb our our Barb be But

earnings Moving related and are slide website. our available release on, the on presentation

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

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

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

Kenneth Bockhorst

Thanks, Karen.

reading ago now. on Karen. happy why alongside first our we're miss Bob board and roles also company IR X CEO It's importance began work skills. public definitely safe had recognize as expertise ourselves years believe have Karen's And all CFO your will to I Barb transitions, very we expert consider of joking aside, We function. in and But professional harbor we the have to and well-planned a fortunate to about

with strong XX% but not and across difficult comparisons. quarter. array metrics, a tax performance reflect leverage results, delivering improvement We least, growth. operating flow of last XX.X% sales third year-over-year robust which financial a rate even delivered the increasingly higher our to with expansion including against generated record contributing. reported both I'm margin EPS cash line broad of very top growth gross We and year-over-year with SEA pleased margins year-over-year strong Turning we continued

a In summary, our support against team in executing of to strategic in customers. our continues our priorities tremendous job do

details and to come I'll hand go back outlook. the to call I'll to the market conditions the quarter, over talk Bob through of about the and

Robert Wrocklage

Thanks, Ken, good and morning, everyone.

Turning X. to Slide

been growth As moderate quarter. rate sales communicating to growth we our still XX% line have strong anticipating you, did top indeed and the a in to third

XX% in deliver this was BlueEdge solutions. line measurement, reminder, demand and prior smart of Year-over-year product on XX% XX% increase water utility utility year including communication broad-based, water a sales a year-over-year, As increased growth top we of related the for as water quality, pressure growth continue solutions. quarter. Total suite was our to solid flow comparable on

across the the approximately within revenues in customer BEACON solution. insights offsetting XX% as deemphasized modest the our increased reliance markets. a flat Notably, quarter, the were Sales quarter, applications, our order Service declines industry-leading analytics solid and array on water-related Software flow increasing digital reflecting product with in end line instrumentation delivered trends of focused the globally for from

move the given release, operating customer heavy fewer U.S. quarter, we season. the the into pattern we of expect in noted As do as days the holiday typical fourth

to term. impact. potential hurricane-related certain to utility It quantify activities near in addition, projects possible U.S. recovery the still the any is In have temporarily delay early Southeastern too

basis comparable XX% dollars prior point in XX.X% margin were were a the the pleased We from of operating XX.X%. Gross XX.X%, quarter. percent in of year-over-year, record improvement gross expansion basis a profit with very increased to points reaching year sales, the as and high of margins. margins a Turning quarter, XXX XXX

new gross we are set For to if if -- normalized ready those me a are ready to declare we range? ask margin

is answer no. The

was the positive declined year-over-year sales. as this comparable a salaries. long-term with the mix, gross line, higher And year-over-year. gross basis pleased due predominantly increase XX.X% is were of improvement expenses will margin although by in along growth margin this on in the improvement. XX.X% solid the also were confident which costs, we including X to year trend increase Despite in this $X uneven the higher sales While evident an the to that driven a points overall saying head and XXX structural percent was be quarter can and third million, quarter, quarter, quarter approximately SEA we primarily management volumes, million spending with higher personnel-related we not The remain SEA price in quarter-to-quarter. spending, of cost increase are in $XX.X contributed trend. outcome prior from the count mix also to quarter The confident

compensation in transactions. tax The in the XXXX of was XX.X% comparable the benefited income equity year from from compared benefit provision third prior quarter a XX.X% discrete tax which to period,

the to effective rates. or minus range, in tax in tax income change income continue plus no corporate ongoing expect overall an rate We assuming XX%

XX% Primary at In XXXX, a in year-end. summary, capital quarter of improvement third working $X.XX a the consolidated the as and XX calendar basis prior points of improvement sales prior from percent $X.XX end with EPS XX.X%, from year in consistent quarter was of was XX.X% the comparable quarter.

$XX support flow prior working effective the of year's result to of management. capital than Record continue million and working XX% largely capital quarterly manage higher to the investments million, growth. free was higher $XX carefully the earnings cash We

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

Kenneth Bockhorst

Thanks, Bob.

X. Turning Slide to

solve of across the introduced that tailorable recall In solutions for as both name cycle. to to BlueEdge users overarching in quarter, offerings industrial that may best preferences customers, breadth to our You water simplify their It's including future. today last commercial a challenges the and entire you given utility water of the is BlueEdge. we critical the available and short, our suite they way change and and to needs advance meet and we've

our ACE. customers demonstrated at Last to we week, of industrial BlueEdge, We proprietary utility we and that representation connectivity both June, highlighting the WEFTEC. technologies literal communication and our software or showcased of building solutions the customers the for management at same informed actionable providing our In did various water improving in aid resiliency relay hardware sustainability. and discussions more BlueEdge the the wastewater true and robust elements were data for Customer making and of at traditional and insights, to technical By taking efficient we concrete interest data that solutions, decisions our water customers systems. in show SCADA management. with examples efficiency, to

from highlight we've Yet the as hurricane And regions tragic recent have these heartbreaking. Most events storms during is Texas truly hard States. resilience, importantly, to customers it Beryl I Southeastern devastation the of as life speaking July, Hurricane to of received relates feedback loss well United as maintaining were hit the customer is wanted in in in critical these and information prioritize leaks our with counted that resilient resulted without and solutions and confirmed This differentiated communicating it again users, when clean a identified solutions water even in other fix power. network. and when our end performance to differentiated countless continued availability only for utilities that repair to most. cellular activities demonstrates possible It our

by more industry availability in outlook. these underpin weather water by the technology The adoption the to turning labor macro and drivers challenges. as extreme aging pronounced evidenced exacerbated becoming events structural are that and infrastructure Finally,

growth press growth bid opportunity strategic and high and an noted in with holidays. we release quarter U.S. with we single-digit order expect include focus as operating Bob's sales various earlier out over we bodes that the close operate fourth and fewer the as customer cycle, for given the rates on continued which book, pipeline our comments, well funnel, encouraging to the continue earnings the We year, will sales days

hurricane-impacted regions generation reminder industry. We our profile the in the It's sheet we organic of attractive remain potential invest as in and this the existing we growth potentially anticipate dividend. both provide the priorities the in inherent Additionally, early cash could commitment and to certain of and situation while to highly capital type projects quantify any inorganic further unevenness in have a balance we still an steadfast strategic allocation near too also customers term. and serves in delay to impact flow

remains ahead, remain In our open and engaged With for please team in operator, summary, driving about opportunities that, the line exceptional continued questions. we excited results. the

Operator

Research from with question first today Seaport ahead. go Our Please Instructions] [Operator comes Partners. Scott Graham

open. is line Your

Scott Graham

didn't very Karen. hope Karen, ones know you you And you certainly that out start will for I'm But I the but Yes. the are happy great there, of helping and to be [indiscernible] one I you, transition. coverage. sad luck I I for me, good

Karen Bauer

Scott. Thanks

Scott Graham

Obviously, we'll be forward. speaking some more going

sort XXXX you know Can be have you're give then really talk that, you're different a years, guys cycle implication the you. high strong there -- little careful question to the specifically know So, for through about short too of But low that sales I follow-up period is, not 'XX that one, I of sort you X any single-digit might growth mid-single-digit have for what to including is what than a that like I this I'm one means on measure what the thinking. and since context? given I thinking growth have is measurement coming bit a us off and

Kenneth Bockhorst

Scott.

that and So this we in asked time that at question forward about through last same it's you the about welcome because asked year. going exactly high digits interesting to coverage were cycle about the that single question this year

we've have and portfolio, way strategic advantages but look the we the and from say always our From be able to remind been can strong as quarter-to-quarter, it the XXXX. think into coming we market that have, and X-year dynamics the people, about think cycle deliver year-to-year, So we we execution. we feel best-in-class we I forward that that uneven with as

be signal into weakness So that year. to you the like next expecting trying of should it isn't some we're sort coming

Scott Graham

Okay.

that's I of on it. transcripts, out think think to reading your of I'm all get my going based I

fine. So that's

Kenneth Bockhorst

trained us Scott. has well, Karen

Scott Graham

say volumes be, well. on as to there ranking and as just Is seeing primary I your a the what I top drove look, real pop that guess, job of Understood. would saying? you positive phenomenal weakness, doing well, nice And margins, that there. a a I'm not mix, leverage and it And there guys that growth. When driver for some But cited the the lesser assume, was is comes you you're to was margin of glad guys sort I up are believe were you drivers? price/cost as defined line. you're the which

Robert Wrocklage

Yes.

is and mix you're actually top product mix. unit typically It's not growth the hear price did cost kind ASP and and an So increasing. sequential call right. sizing to pricing. exactly out a absolutely but specific of we The line absolutely mix you function or our It's get then of or just customer element volumes into mix margins. don't And ranking, project of benefiting

elements the So those are X contributing.

Operator

Bank. Krill question from next Andrew Our with comes Deutsche

Andrew Krill

morning, your for everyone, you so well. Thank Good as to help. Karen and Thanks. my congrats

an of get explicit ask I but as So is outlook, just very driven just XXXX even to or sales wanted given wouldn't one how on outcome think opinion, flat the the story like the to down positive you, sales mix not we're as and time? industry more to over I low be replacement surprising going

Kenneth Bockhorst

Yes, a down to us. be would year surprising

at business even If was grew history, year the our when everyone grew look in It COVID X% in down utility year. you X% year. the even else our supply the even considerably, chain COVID in

any but factors So regardless are strong. we industry the be down XX%, expect other X don't year can these just years. of in still events, or varying might year It X%, drivers another of be effects very that have certainly the might macro

Andrew Krill

you right sense. now. Great. the Badger of to how big you like on we Meter? is then the makes can percent know what get Just any kind can it like the But the Southeast Southeast, hurricane said it you could directionally do I so Okay. try impact and some business can't of you of -- maybe like size sense be? for That quantify have And

Kenneth Bockhorst

Yes.

So no. couple But let me of things. take a

I just next of at as into want into look out So a QX point factors one, we and couple to year.

sixth is pointed are call, it's have Bob sixth holidays this year done year, I that the So out we in that and the there this and QX.

story. So that's anybody followed our who's for new not

hurricane remember that impact, revenue I our with think to of direct utility important to sold end the is XX% users. it's Second,

with directly outstanding, are that relationships into but that a doing sensors that insights and communication other people open XX% thinking customers, now with X-ish do operating. we for which the we've And when us the been communicative, distributors sales network cover out the great work. and installing meters you're people change gives other model, our really have we our are years So in adoption of to requires throughout technology go about how have

when power issues down and when way they -- us. where happening, lines are customers And that always that we are need have this operated can are impact. and the for we've an is other here And

would had I talk out issue. XXXX to happen, pretty didn't we specific when of good right no in There's we going we on directly what go back because QX. back and you off sizing. lay remind a specific that And no there's most So was take was you our to COVID if to customers. rode hitting, we people

quarter supply X% grew potential were there The the chain of year. that XXXX, first first was we We signal that still to challenges.

So potentially that still I we try be to unevenness. is point extremely can results. could you assure are we that that do everyone of to control the what controlling at What things all we good can is the causes good and we delivering really out

know what mean answer you, that didn't the point you long-winded got but I I that of was tell So a hope specifically we here.

Andrew Krill

quick one one in. it. if just Got I last And have

there's should hit out, they and no the if correct? right, were Just in, get canceled quarter some XXXX, it is chance those delays think just of in first to there fair

Kenneth Bockhorst

that but quarter. I not promise would be I first say for would they cancellations, sure the delays, there can't be would

Operator

next Rob The question Mason with from Baird. comes

Robert Mason

about talked You backlog. normalizing

you've think this through been around as we've commenting year. I that normalized. maybe normalizing, on word gone the not emphasis Again,

you relative a to it's more state, you that's is can higher what your that? consider give steady as backlog If any to than assuming us sense correct? where level So maybe of would

Kenneth Bockhorst

Yes.

a we prior so there it. sized last to called didn't change out into that prior this quarter out aid no building So quarter, bit call Rob, we the an within because it was backlog extremely but we backlog, never we've meaningful it more. to where

been. we at from in that customers the what's So to the backlog phase what's to in to what remains areas it's phase market solid as remains of very bid ever the the engineering in positive. shipping look our we're it All still as

Robert Mason

think that about, from offered also a that a growth Sure, unit-driven obviously, is Just was, the ask is that services, under noted that rate tear SaaS growth wanted you bit? little component? into rate? besides again, kind just new should services down growth you solely leak other your detection, What the maybe BlueEdge Can unit things, you've which that a rolling of now. sure. Or contribution as the to of number are that, strong. we I really SaaS in a to revenues,

Robert Wrocklage

Yes.

clue. So to being Again, I talk a think you've up picked as function attachment our rate first hardware always on sales. Service XXX% we Software our a the AMI, about of

then stream aren't when those the doesn't is there is indicators, rate lion's lagging about more attachment That So of a mean ORION fringes, SaaS. quality meter et share of mentioned, the radios SaaS a impacts Cellular from devices, the because basis. uptake the the per detection leak leading you per on factors XXX% cetera. indicator recurring water devices, talk we sold additional revenue That that on of course, month additional

to But is where and we XX% today, stream the stand meter BEACON revenue to related cash, AMI. of surrounding

that with about script offers to it benefits and the absolutely And we so the the field. Bringing that insights that and intelligence is talked customers. today units driver the the additional in in hardware additional that,

Robert Mason

in. last squeeze That's If see. one could I one I helpful.

going business The maybe the be But an in Just could impacts. implications a to Badger. newer maybe the business. back is business leak the hurricane headwind that interruption detection for again

know that that the potential you see the to that I to incremental like deployed is that? as a as have history So inspect just actually those don't try units demand when of for out well? business can instances into nature some disruptions business are field

Kenneth Bockhorst

Rob. Yes,

detection much built and just software, monitoring, as we've added. more of people capabilities realize we're reasons out those Events products necessary pressure about new excited like we sensors of So this the adding so services make how are. and some that that of one the that's our portfolio leak

it and to the that called about before. excited about I as script, shows it now, hardest-hit have. of were in storm, storm, hurricane our just in about the it, not excited that, others the feel make of customers we just but benefits the fact just doesn't as We're continue on top out parts us the throughout. so the And but utilities better communicate that And surely the then

It's throughout people have driving their power it's issues lot problems. And heck them So a than for when communications, more efficient down their of around than where perhaps there's where out through looking system. telling they our are safer looking sending a areas can line. guys cellular battery-powered lot a

seen of is portfolio So truly unfortunate times the the combination whole really at together like coming this.

Operator

Instructions] [Operator go to move Please ahead. next We'll Nathan with Jones, Stifel.

Adam Farley

eventually seeing way kind This I know gain customers? acceleration is to BlueEdge customers? I around frame Nathan. I for you the share with Adam it, ask imagine wallet still that to selling are Farley on of expectation it's your bundled more question My first is in early, wanted any but you to offerings

Kenneth Bockhorst

exciting it really wherever this are any allows What's journey. us technological at is about customer how we've Yes. their anywhere approach built in to they

their BlueEdge customer lift Meter So if side, and quality station water in Badger that can on they with the into then be reach or bring metering water we stations like. a could expand someone's the through them through we the quality monitoring or metering

So it's both back and forth ways.

it look also at portfolio full customers Some upfront. as the

it this. at quality that the roll they you to them I'm to going it's I'm in AMI have look know that after all whatever Some to see. do order first, water as and going my great

we standard tap highly with is confused to BlueEdge services. current that we whatever a can concerns solutions different when imply based word the on pick by into tailorable, be which mean not customer engineered So whatever use and they portfolio products customizable, the are, their what need would and

Robert Wrocklage

metering the water starting versa. thesis take mean vice in is and able the and That's position cross-selling BlueEdge back being But XXXX. customers customers acquisition them been and of and with and talk it bundling strategy we it absolutely is not behavior quality about the idea new. I that and to since new. sell And how and

more that to this way make brand-new It's a but set strategy. tailorable that want new. sure strategy solution is and way a to to better more the absolutely I underpinning bring not So like it's itself a is just understandable way not that and some market, to tangible

Adam Farley

helpful I shifting That's Yes, to allocation. guess understood. capital color. very gears

the XX% dividend bit annually. by Maybe healthy your a Anything What raised there Balance helpful? recently still the talk You be funnel. priorities? are is sheet about position. about little main very cash would net M&A

Kenneth Bockhorst

Yes.

remain So several constant this how priorities now. years capital we for allocation viewed with

in in and AMI to pressure So when first been that the forth. monitoring also quality water remote it we've leadership expanding and and ultrasonics so leader into R&D foremost, market, cellular and software now came the

Second, increasing important to yes, something XX that M&A. then And third, capital consecutive years is is yes, priorities. of certainly allocation dividends the

we're a So BlueEdge, keep more the the into those into area really that the years, water more proud quality, X.X deals footprint, whether come of pretty we've around pressure, more global interesting software last continue X in strong to funnel that's we and plug done play. things sensor can all

So hasn't it changed.

and for we disciplined remain where value it continue We translates to look into satisfaction. customer know

Operator

Sullivan next comes Maxim our Tate from question And Group. with

Tate Sullivan

you about a water allocated markets Is Have the market, ex Thank for there the Karen. you you monitoring over And international there? years, international please? a quality sales the still talk that Ken, you your -- can help can more address bit? opportunity

Kenneth Bockhorst

Yes.

the long-standing of that occurred So customer the the acquisitions things years with we've certainly seen couple the of over growth some past already, footprint larger had relationships. that of have

U.S. s::can long-lasting in the an U.K. extremely countries, in relationships and particularly strong having installed So relationship. Syrinix over having ATI U.K. long-lasting, base XX

like talked able before was we've even Bob to having making discussions announced been we've the type those certain BlueEdge about world of and those to BlueEdge to these leverage conversations there. been improvements So types have

has in so it it. our with bit in seeing been American a global -- globally. growing and gets of been expanded by we're lost that fact excited It's we're globally. what BlueEdge what But little the that seeing muted bit a happy gotten growth, we're North terms outstanding the really we're in little about growth for We've has growth relationships just

Tate Sullivan

higher still approach? international I Europe has the Any broad-based historically, in but I mean, a Or particular bit areas? been growth know

Kenneth Bockhorst

then ATi talked more. Well, I'll monitoring, certainly talk whether that be about ], that been around U.K., of one the world, has. lot you they're about of able lot into. U.S. a been we relationships to that lot We provide X needs But looking We regions just customer hear cracking cycle lot here in for [ we've high-level their we've give and still example. we've detection, around in specific discussions example AMP could to you them the too, the satisfaction, are the utilities able has those talk same be about -- just relationship how in software, there's a just and Syrinix that And And AMPX pieces whether about help a the that of one of the us. leak meet to have been with potential smart metering other part several that there. for but be river that whether the a

Operator

you. Thank

I'll We have call turn to so Karen. questions, the you, over no back further

Karen Bauer

all Great. for Thank joining call our you today.

our For tentatively is follow-up any Have fourth questions your quarter scheduled purposes, don't you hesitate call great planning for with out Please day. reach a to XX. might January have.

Operator

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

lines. your disconnect now may You

Badger Meter (BMI) 17 Oct 242024 Q3 Earnings call transcript