Yahoo Finance Badger Meter Inc (BMI) (Q1 2024) Earnings Call Transcript Highlights: Strong Sales Growth and ...
Total Sales: $196 million, up 23% year-over-year.
Utility Water Product Line Sales: Increased 29% year-over-year.
Flow Instrumentation Sales: Declined 3% year-over-year.
Operating Margin: Expanded by 290 basis points to 18.6%.
Gross Profit: Increased by $14.4 million, gross margin at 39.3%.
SEA Expenses: $40.6 million, up from previous year, representing 20.7% of sales.
Income Tax Provision: 23.5%, slightly below the previous year's 24.3%.
Consolidated EPS: $0.99, a 50% improvement from the previous year's $0.66.
Free Cash Flow: $18.8 million, an increase from the previous year's $13.7 million.
Release Date: April 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the sustainability of the SEA costs as a percent of sales, which have been notably low? A: Kenneth Bockhorst, Chairman, President, and CEO of Badger Meter, explained that the company expects to continue seeing positive leverage at the SEA line due to their portfolio and selling more into AMI and higher-valued areas. Robert Wrocklage, CFO, added that while absolute dollar spend on SEA is expected to increase with ongoing growth investments, the first quarter's lower percentage was partly due to timing alignment of sales growth versus investment.
Q: With the recent EPA final ruling on PFAS, is there a way for Badger Meter to participate in this market, possibly through M&A? A: Kenneth Bockhorst stated that Badger Meter continuously evaluates areas of value to customers through their strategic planning process. However, given the current guidelines and requirements around PFAS, they have chosen not to participate in this market at this time but will continue to monitor the situation.
Q: Could you provide insights into the inflationary pressures and how they are being managed, particularly in relation to pricing strategies? A: Kenneth Bockhorst mentioned that Badger Meter has successfully implemented a value-based pricing model over the past four years, which has allowed them to balance market demands and pricing effectively. Robert Wrocklage highlighted that while inflation is moderating, it still presents in categories like transportation and commodities such as copper, which has seen significant price increases recently.
Q: Can you comment on the flow instrumentation segment's performance and its growth prospects? A: Kenneth Bockhorst noted positive trends in water-related areas like wastewater and HVAC building sustainability. However, he mentioned that the non-water markets within the flow instrumentation segment are too fragmented and small to provide clear market insights.
Q: Could you update us on the water quality, pressure, and network monitoring solutions, and any cross-selling opportunities from recent acquisitions? A: Kenneth Bockhorst confirmed positive feedback and tangible results in share of wallet from integrating new acquisitions like ATi and Syrinix into Badger Meter's portfolio. Robert Wrocklage added that these acquisitions were part of a strategy to respond more completely to RFPs and influence decision-makers effectively.
Q: What is the outlook for growth considering tougher comparisons for the remainder of 2024, balanced against resilient end market trends? A: Robert Wrocklage pointed out that while they do not provide specific guidance, the expectation is for high single-digit growth over a strategic planning cycle of five years, acknowledging that growth rates may vary year to year. Kenneth Bockhorst added that the demand profile remains broad-based and robust, supporting continued growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
