BMI - Earnings call transcript Q4 2024

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Operator

Ladies and gentlemen, welcome to the Q4 2024 Badger Meter Earnings Conference Call. [Operator Instructions].

As a reminder, today's conference is being 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 Year the XXXX thank Quarter Meter and Full and Earnings morning, for Badger joining Fourth Good Conference Call.

various and call risks with Executive you reminding on any statements Quickly, Chief release are that and call President non-GAAP our Investor important subject Relations. Please Noverini, website. this the which we me slide the our to Ken of On are On earnings that Bockhorst, Senior and financial uncertainties, Director the Chief outlined safe harbor, certain call, of and made Officer; presentation forward-looking refer most Officer; SEC I'll the in during to Financial Wrocklage, today's metrics. related cover note will Bob are and Barb today press filings. Chairman, are available release

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

Kenneth Bockhorst

joining record results We operating flow thank Karen, call. share and capped all metrics. quarter fourth our strong cash another for off across earnings with per Thanks, you profit, and sales, year

recap about and incorporating acquisition, today in of We about We're tailorable excited BlueEdge station sewer talk call. into and of discuss lift solutions. I'll our more SmartCover. outlook announced the monitoring a suite year acquisition provide offerings also of the their the our the later

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

Robert Wrocklage

everyone. morning, good and Ken, Thanks,

Slide X. to Turning

year-over-year XXXX. continue From as Service. Sales year X% deemphasized including on water XX% on smart as standpoint, demand utility we difficult we across growth line another which, the quarter. Total top end broad-based, the results sales markets applications. at AMI delivered water in close Software quarter increased a were water-related line mentioned, in up quarter across Cellular instrumentation sales cellular array prior a in Ken deliver out delivered declines solid and increase Beacon by of As applications was BlueEdge adoption, XX% our product and meters, sales of utility of growth customer core XX% ORION as of slightly endpoints we solutions. reminder, as the offset for solid to was a our associated flow growth, comparable a suite quarterly led product Year-over-year to the

We're overall operating basis to improvement point to the XX.X% million, XX.X% that and support margins costs, management profit personnel-related margins. the price/cost XX.X%, quarter. our prior headcount basis very improvement. SEA Gross an $XX.X solid contributed to XXX due was fourth $X growth. higher and salaries year-over-year. higher million including the in sales came structural in the Turning quarter. spending pleased XXX in increase volumes, gross year-over-year of quarters, mix comparable to quarter were approximately benefit points primarily prior expanded with of expenses in margins margin increase The year a the at to from Consistent

quarter the of Additionally, EPS tax with as XX% prior the the higher quarter transaction. sales to SmartCover the a quarter the from of was continue XX.X% we XX.X% XX.X% no XX.X% fourth XXXX the year included range, income effective income which deferred to increase of XX% tax was at payables certain of provision tax declined XX.X% these the balance revenue sales. The plus comparable year In in expect year which improvement reclassification an percent in rates. portion Note to SEA percentages basis, compared to summary, the were in rate XX.X%, period. in full December XXXX, $X.XX that change slide XX, on closeout provide the pro year year-end. basis improvement, notably from the tax Karen a details for or absolute Similar 'XX acquisition corporate our to comparable last XX costs overall $X.XX ongoing reflect rate, reclass fourth this prior in income minus the primary the a a were inventory prior of to in points will comparable associated in compared capital not was in reduction other sheet percent on assuming pleased forma working prior with at capital year that a call appendix in current sales liabilities from and comments. We her working an There's as bit XXXX, quarter. Primary restated. years more current information levels. consolidated the of current

to turn we over free result, cash record flow a $XX.X call that, the generated million, a the strong quarter, year-over-year. With in I'll As Ken. back XX% up

Kenneth Bockhorst

end customary Bob. reflect on against take and our collective performance our year of a goals. to the Thanks, at the It's step back strategic

outcomes be top XXXX sales growth XX%. line couldn't in of the tangible in X. here X-year CAGR seen a with I in team's years Slide which from as XX% continuation We more pleased surpassing of noted efforts revenue with recent the million delivered on in a trends $XXX represent So XXXX,

to and gross expanded million, [indiscernible] flow over EBITDA in excess our example latest over on exceeds with years smart points the the and X I'll margin generated to value-enhancing margin contributing of to enabling rate and revenue margins Operating of advance improvement hit of XX% increases finally, return Our dividend our solutions, last rate $XX free and in past dividend XXX% years water a reduced form which growth X earnings, a cash discuss working profit doubling capital XX% X.X% expansion. our record dividends, with the leverage as annual ago we ability market, continue consistently XXXX. And now our next. of in the years. annual track the innovation building of XX leader intensity record X both shareholders margins portfolio acquisitions XXX just from representing to consecutive executing our compound and our sales net in of further software resulting of cash the in years

across is and America. sustainability. a this hardware-enabled SmartCover's municipalities provider leading water efficiency, serving monitoring add offerings data scope SmartCover resiliency software X Turning actionable of collection to morning. to utility SmartCover I'll announced the X, used by acquisition system and to Slides cover of the North customers improve earlier solutions,

which related support Specifically, sensors, sewer personnel on spills, services predict, basis. more in and are the while public By utility the potential extreme overflow work alerting provides frequent the with prevent and real-time heavy sewer software identifying SmartCover saves becoming health detect like and sewer changes issues, flooding. Reducing monitor rise to environment. of of a levels to the patterns to protecting and money and rainfall and solutions severity events weather frequency overflows

influent station the certainly locates tuber is combined to these terms, to purchase technology for improve the addition, adoption weather believe customers support offerings. line efficiency, to and baseball barely brings such strong with and monitoring aging pump $XX it In the in in labor it And This the put inning. events, approximately talent reduces also $XXX these Kellogg with deployment And lift drivers of increasing supplementing applying of the the infrastructure we million. areas in sales first climate-related macro to infiltration last, capabilities. We water equates about in intrusion least, our and technologies. existing million sector assists assist price. behind strong expertise utilized cash station monitoring rates sewer regulation hardware for our SmartCover Xx hand The technology XXXX SmartCover's solutions for high-frequency of as provides but existing managing severe and on availability, occurrence cleanings, harmful software control detects need gases. the with not

a makes In revenue network this addition, into analytics recurring market long-term monitoring value the full solutions leading further SmartCover's the leverage ability to position, shareholder creation. with strategic our and dynamics and data deal

with high of As reflective noted, their growth million sales investments. single-digit $XX EBITDA about and today heavy scale are margins

Meter's As by Badger advancing with direct leveraging top the our the overall amplify market. organization communication software suite of in to differentiate offerings and competitively which of growth Meter can rate will features we and part by sales world-class and and BlueEdge, continue technologies our line functionality Badger

also by will enhance leveraging chain. aim We supply and and in existing processes infrastructure to operations profitability

remains adoption X XXXX Finally, I've face years At our customers year, BlueEdge but this as macro our level, I even resilient macro been. as am variety excited water I water I after be efficient, ever their more persistent about and solutions said as see address of to comprehensive with continues growing last systems. to them challenges turning sustainable to our we true of next enabling the outlook. and suite it know results. a the stellar tailorable

durable Our for secular need underpinned by is replacement-driven data real-time spanning AMI the demand, business analytics the and model adoption expanding and water network. visualization drivers

high customer continue time budgets pipeline Our the we've support average growth and to for some order been with top communicating now. line single-digit book along constructive opportunity

We to strategic gradually also positive SEA cycle. continue structural and leverage expect improve margins the over mix sales that will

end high to the of that above prior in pleased of Specifically to year, on above range gross the quarters the margin, we XX%, the delivered the half back XX%. XX% normalized with X that, we're of

the to potential the some While is which macro relates are as might increase it scale, we're in to range, especially unknown. of reason a timing heightened that scope, uncertainty, state duration tariffs, of the view as and a reality

within clarity, current while range our improvement comfort until areas prudent the such, zone actions further as there control. the is keep As it's believe we our in continuing to drive to

of our of the higher margins well step-up. in continue inventory XXXX SEA as will by in their the value estimates sales average very This I'll of as estimates SmartCover we the million amortization, which term, XXXX, on underlying a will that range could fair for bar remind addition long $X preliminary a percent improve will asset annually. Separately, everyone the be intangible higher line result of reset over than anticipate that as percent the quarter to While amortization be of SEA levels. a in is sales SmartCover $X muted operations added as the first than the million based of preliminary to the

income cash. decline the with will interest year-over-year use of Additionally,

$XXX even SmartCover our team in organizational tremendous the over Meter. significant forward together. With to our I cash on Along efforts of want and have operator, many the we'll Finally, that, entire and financial thank look and Badger to line and the opportunities please to investments. I with questions. flexibility for acquiring Badger again to untapped further SmartCover, open their XXXX growth executing on organic welcome we strategies, execute to inorganic balance million. ahead revolver, for after capacity accomplishments Meter the new colleagues have sheet both on including the

Operator

[Operator Instructions].

Bank. Andrew Our Deutsche from with Krill first today question comes

Andrew Krill

tariffs on ask first. to want Just

could be widespread take think it I we you to have maybe any if adjust color long of place how and in size if the have footage. that contingency your place do would manufacturing just then tariffs some us the exposure. like around Mexico believe you explicitly I might on on tomorrow, like more could give little in plans price. more put you And it's clarification But a helpful. XX% square Just help

Kenneth Bockhorst

Yes.

so with -- days So uncertainty the come that's these will all much a bit loaded a, from, be, of course, tariffs where what of about works. of they'll it what question impact how

So some we you can a We've in through. of we clearly, our U.S. amount point We very Nogales. last to will, that of all, I'll first of to of you would use. operation years. But from very we we're reshoring, from over tariffs capacity to this outstanding if what view, done control. we are, we certainly facilities regardless back our China America have that impact continue the and some tell of several of have can comes remember And considerable things know do yes, however the everyone proud North And a have little. in what source

seen or what control, threat yet idea the to our control would model. we've how thing is of being do able best-in-class what through of through mitigating have we several job through will great been So that years Trump acting urgency and what operating the understanding we've been has years supply no last tariffs chain will over And you can the the administration, hallmark I around with several we last have I done go. those been the actions challenges. think in I a a I first remind COVID, having think the We've But can. we administration

going all no to idea it's don't impact model you to you is have is know what hard how I and something be. when how work out, the So actually to going tell this to

Andrew Krill

conscious interesting. again, but And on as not operative using word and you explicit the thought give then guidance, [indiscernible]. the the was choice end do release press resilient of in then just broader market demand, I the that

So maybe years growth. just know there's multiple of impressive very we --

than growth now earnings think Just third you confidence -- XXXX when that do you is reported maybe higher your could here? a be it high was quarter single-digit

Kenneth Bockhorst

So it's it's but good in it not higher, as QX. as was

and and really that we're in proud what we quarter continued where revenue. the I'm with order in street are the pleased still we on for and that still had pleased future. quarter. of portfolio, saw the it's rate in water the BlueEdge out RFIs So working on the -- the we Certainly results other engineers AMI able another of to get quality with several pieces seeing and Certainly projects

has just changed. So I say nothing would

positive tone ongoing remains Our the same.

Operator

Our with next Mason Baird. question Rob from comes

Robert Mason

Can there, overflow for compliance SmartCover? catalyst? you bit is the much what's about driven, talk whether mandates? Just little how I'm are that's just drivers to catalyst adoption for What maybe a the been of CSO kind demand the date primarily that solution? curious

Kenneth Bockhorst

Yes.

a things. of mix So it is

So be course, mandates monitoring time. in system this overflows of regulation where the is, got to one areas critical of and real you've

outlook weather the extreme business about outstanding what very of similar events drivers ability over excited it. same growth the last to to technology. it's the labor the Of through our same we what for But similar driven reasons macro the channel we're It's sell the on then about critical us of has of say the has one years. see adopting availability, existing course, macro a labor several driver. drivers, our rising pretty rest the and drivers are where growth is excited it that I that would availability is is Many

Robert Wrocklage

would that of market obviously, opportunity, is, stage, the equation inning first alluded at adding I earnings Ken we to mentioned a say, that as analogy. in just the meaning whole rate adoption was technology the this script of this And to

and of the of in runway believe and number take terms to position positions in we And advantage collectively monitored sales of covers our across manhole of here channel market-leading America, plenty us customer North that SmartCover there's of now the base. so leveraged

Kenneth Bockhorst

the just not get payback. there's of it's side, of can cleaning, but the And reduction when into Yes. frequency regulation you financial the

to benefits said, this as really scratching many just surface. there's are, So Bob that the

Robert Mason

in in million revenue would $XX the trailing be of much How recurring nature?

Robert Wrocklage

Yes.

as in that's more So as but pure recurring product of business would revenue, another from recurring, is is a the what kind so service, a not X/X. I of to so service which, roughly certain durability software would maintenance also there's or I it. classify say and aftermarket again, amount XX% replacement

Robert Mason

question. good. last Very just Maybe

to over itself. shifting Just your business

in through You called been just out, Bob, amount the year. up I'm did quarter. the performance a excellent working down where -- capital tracking fair the had from inventory it

as that of should back we Just the come I Or curious what we does And that forward? go mean the up? that at enabler was. level trend at

Kenneth Bockhorst

Yes.

great to seen. we've I'll go improve our rate proud still really to we a happens and thought sustainable that to better that's for to at lower. was to We've will mentioned had our opportunity beginning inventory you Bob And across I'm to at And that to processes. But be continue a So business. an year for what we've we us first, team sure just mindset frankly, improving have years working hard continuous is get about something add. talked about been of now, Rob, the the improvement what several really the I've

Robert Wrocklage

fourth byproduct the came our nothing quarter. in and you for We that flow growth the free multiple we is inventory up fourth I to high about saw say Yes. I support know cash and anomalistic And would lined that. outlook. the focus. support need quarter the still to business single-digit there's quarters together of thankfully, of in say that purposes, would all what

at say that we any optimum to fixed certainly, not as that's are the So means, an the by but year. we're dollars exit level

Operator

Jones comes next with Our Stifel. question from Nathan

Nathan Jones

through with XXXX. I a start question revenue cadence wanted just the of about off

there. the customers color to in the or inventory just project was fourth You us bar the or or some like? the in might help through shipments get just were quarter? quarter. and in cadence bad the anything Or second quarter in buying around it hoping fourth down something what If did see quarter were some second there quarter dynamics was set would what that look for revenue I'm quarter. second weather in XXXX third were Sequentially, the peak that the

Kenneth Bockhorst

yes. Nathan,

a for talked always a we that recall, take quarter-to-quarter, to traditionally deeper not of backlog out we've the seen quarter, In can why we business how having particular most pointed we may the about in which from that So pointing quarters, that rest just than our of be caution dive run uneven bit out year-to-year. rate year. you thanks from have is into for did the

So voice turn I'm not strategically my losing I'm to now, to going Bob. but it

Robert Wrocklage

Yes.

the absolute some quarter I in dollars, that Nathan, that to, quarter, unevenness is you're would quarter of -- more if the So everything only Ken I talking and say alluded to. in had else the "noise" that Ken would would it second as have general mentioned been say only the trend had

If would change, last is about having on robust say the a anniversaried half you're I the increase year. rates talking of second more and impact growth lapped biggest just

tell math, basis, go-forward by rate in laser-focused there'll we're that with horizon, growth high the slows. So just still be basic single-digit just a strategic and you noise of quarter-to-quarter the on I growth over reality would that year-to-year. planning our that

Nathan Jones

was Yes. No, the of dollars about talking revenue. I absolute

number some XQ SmartCover. one had you're bit backlog. probably That's a I supply taking the elevated because down So I just chain on is improvements. guess around little

this you sewer pump just this guys pump Just business on put a have put like of pumps. I on the the I SmartCover? like couldn't is high to a XX% something somebody guess customer maybe that would couldn't have pump right why the similar does look to the a sewer a Why an have and that kind the give manufacturer, manufacturer closer manufacturer lift there advantage at don't business? them something market sell share kind a competitor, when from question Why in over them station of that level, sewer would SmartCover monitoring? do sewer

Robert Wrocklage

Yes.

we that's question somehow a I play that system across assumption certainly acquisitions, to SKN, more with, today, recent in underlying the already. presence and not that think Telog, or Syrinix, ATI, today So just I'll true. systems the sewer Certainly, is collection network in don't the collection network is there start

where space we fairway that reaching not don't So to a this over is play we're a play in reach already in.

would a what that, monitoring the the there's and sewer we're of So here today. I doing line presence essentially, to specific manhole. at say is there already aspect SmartCover

being the infiltration depth mentioned gases. flow to as it analytics produce and those well monitor that and spills, and and the release, earnings of level that as call essentially manhole optimize outcomes cleaning in predict sensing inflow sensing to then drive So X from we prevention toxic

the American not in So critical North expanding collection decision that I would can't similar software a adjacency provider our at and done people technology do time solution our just attractive hardware that the that of of solutions, utilities not other I'm a tell you is to and super say leverage utility to analytics only XX greater years I North data This the the is already of that brings to, that's as best. in our and this sure about with. and why it. America world. most the scope marketplace, the SmartCover we've after could to terms but for in And in in maker very that definition asset solutions integrate we're to large excited scale participated a the presence near long in the rest a part, network, ability has

Kenneth Bockhorst

understanding the people to of the we the no we which, add could referencing, done that software we've Beacon build with who software space AMI our products already other have services radar of lot with able that communications I to have what be, the way and who's around core and compared will if and with already that, a Nathan, course, opportunity our to time one we portfolio and have. in competency communications and the could And and this on to you're spent be and

Robert Wrocklage

answer, I we're sure certainly of while out monitoring, I that to make about didn't sewer an a And to we just lot talking going very -- sorry, in big same leave There's monitoring. to many just here is similar part at this want answer, focused pulled was say, a station. was technologies. again, sewer of that's my lift those at line the respects we earlier station And already in lift the business on

to collection it's a and not lift the address absolutely just station the full between so And sewer perfect sewer system. line monitoring collectively marriage but the

Nathan Jones

EBITDA I the that. like This at investing margins. guess final one. and a pretty at like single-digit Obviously, today. business significantly I long higher about or that one you seem get business moment growth it than have how margins margins you to? a would Maybe for business think X to XX small want could out, where look things for don't High years, the scale and should talked is you know where if out this look you

Robert Wrocklage

core. would acquisition so position mean hit the profile XPV's you here, I ownership an at the strategy for in large I the on than under head was date EBITDA is growth. nail part, Yes. to say margin it to less our

take step investment SEA SEA probably we And temporary But this revenue XXXX time, million that's that so bring SEA leveraging of things can ] we cost than whether [ in we essentially whereas why in average higher alluded other and as the back faster. And there's there's down bear, bring that basis, script already with to functions, our on and augment heavier in business $XX to over top larger around we've as been it's line a the talk growth a go-forward corporate engineering, supply to increase range think SEA. in organically or we here a in what's and similarly, about levering profitability. through kind and the growing bringing double-digit bear synergies to, it we grow or of channel chain, can Ken make

margins we on EBITDA business a So look above today. line is where operate think we core business has as the we out, certainly this well a that average

Operator

move We'll with from Seaport Scott Research next Graham to our question Instructions]. [Operator Partners.

Scott Graham

seeing your either just kind you orders at sort that year about you're juice ran look the sort know normal because of number a a your to what extra backlog lower-than-expected are said faster-than-expected XQ. the and away from I any I been that higher deployment. of fairly there Are wondering second an little and how deploying some you bit you through was, of has bit more unevenness? little you or backlog? quarter, of how as understand for dynamic of the quarter again, last I'm wanted unusually in had of you, that second excluding backlog deployments

Kenneth Bockhorst

Yes, Scott.

and XX,XXX next always utilities to various of with reminding one to which is can what people scales replacement sizes, always prudent like the thing we're cycle predict the from one it's So difficult quarter or is to really the do. why feeling year that next be, to of the unevenness

So another just backlog in flowing pattern. it digesting and seeing say, terms what kind I of very would of it's call and to X,XXX small chunk how would like but rates And largest, big are a in trying normalized uneven I is utilities, mediums, XX,XXX through, we're get not flows normal. with again, big what XXX chunks order we're exciting

Scott Graham

Understood.

ordering about you of of talk regard Now know to I'm in I pauses with And election. the you them with are that regulatory sort orders were digest to or sure results ample you rollbacks? even time had potential for pleased your some fourth quarter your X.X the to customers, the hearing Trump they've patterns? any and deployments obviously said

Kenneth Bockhorst

Yes.

in So hearing all. at not tone change we're any

phases. as about dynamic So sells as most feel our people. years all next with who and distributors year get We about been recently keeping we in XX% the out sooner feeling excited previous directly. to that for that talk are customers, been mind than a they've of and revenue I've probably directly our

utilities confident first So if be there discussions talks that would I'm the back, we were pulling about to know. or very

Robert Wrocklage

Scott, in infrastructure And or I if pause question, is to specific government or funding think temporary your slowdown spend. a a

a over just it's frankly. not we've quite listen years space, infrastructure about anything metering in money, on last talked about there the you to the If X reliance

necessarily so that And on wouldn't here, the if question little that's say, and historically, I certainly, flowing seen money from any have very market us. benefit impact the a to immediate we've angle would pause

Nathan Jones

vice one question product I to start with regulations related. there AMI No. that by an you the AMI. line is of there more not Is mean I infrastructure have like this your just I'm solution larger do to you Yes. opportunity in sell advantages versa? necessarily your there SmartCover extension, more the and more contract and relative talking perhaps year sort strategic maybe -- you And to can take digital or do like competencies there to with the under broadly, your SmartCover. a about

Kenneth Bockhorst

Yes.

the they one reasons year, want this is sell to that's XX-, about see clearly customers Again, and their package plans a we we So yes, the cycle. portfolio their in X we started because, manage technologies budgets, X or whether that's utility BlueEdge talking the that all last to years next to of whether one if about how opportunity our on implement bundle X-, the utility bundle even think that XX-year isn't immediate. in out

the the grow we things software to one just about. to customers to. And sell on things that that a So can and of your this as like talked company SmartCover about fits is, sell needs we the we squarely in strong to really already question more already the we ability they're do,

no So a it isn't -- fixer upper. way it's in

And just, bit it's as subscale. a got It's well. run a management we about, talked So team. been it's strong

that cross think can I our help So with we leverage. sales

with operational improvements. And attractive as the and that really in we some from with pick think line we're it us. both, it, sewer you up out, as commentary enable to lift pointed to about can was I enhancements I I'm station think monitoring transaction able really but being everything X that can and excited goes sure tell Bob

Scott Graham

in. last this just will this have can view Do year? a modestly this sneak whether be accretive I on If you earnings one dilutive to

Robert Wrocklage

you dilutive it turns XXXX, is to on opportunity we're and cost in at. factor we're short accretion EPS year for X, where the the the in in that really when So that's term, saying it interest, and

Operator

questions, Bauer I'll to We back any you have no further pass closing comments. so Karen

Karen Bauer

this to deferred you'll balance on earlier, historic recast attention slide the portion for did sheet we to I the Bob find reclassification the in capital did operator. pro your appendix, but where current revenue. call forma referenced Great. the of Thanks, want the primary working

payable accounts to other So we've QX going beginning and forward. element data XXXX current in from reclassified this liabilities

So as charts general percent there noted the remains, difference on the you while PwC slide, in in appendix. improvement sales, PwC as see a of those of is trajectory on as a slight the can absolute

So any for cash today. this closing, operations reclassification does flow. And not then change free joining thanks in way from in call or our cash

first XXXX Meter day. of Please my the For a any is purposes, here and in helm your our reach my at IR with April to scheduled great have. tentatively quarter retirement Have Badger call out for hesitate early last XX. May, don't might at planning questions with you

Operator

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

may your lines. now disconnect You

Badger Meter (BMI) 31 Jan 252024 Q4 Earnings call transcript