Badger Meter Inc.
) reported third-quarter 2013 earnings per share (EPS) of 63
cents, managing to surpass the Zacks Consensus Estimate of 61
cents and increase 1.6% from 62 cents earned in the year-ago
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The year-over-year growth was led by the ongoing cost reduction
initiatives that resulted in lesser selling, engineering and
administration expenses and a lower effective tax rate.
Net sales increased 6.7% year over year to $93 million in the
reported quarter. The results were ahead of the Zacks Consensus
Estimate of $89 million. The growth was aided by higher sales of
residential and commercial municipal water products partly offset
by a decrease in industrial and specialty product sales.
Costs and Margins
Cost of sales increased 13.4% year over year to $59.9 million.
Gross profit fell 3% to $33 million from $34 million in the
prior-year quarter. Gross margin contracted 380 basis points to
35.6%, driven by an increase in costs related to the industry
shift toward more expensive lead-free brass as well as product
Selling, engineering and administration expenses decreased 4.9%
year over year to $19 million due to continuing cost reduction
initiatives. Operating income decreased 1.7% to $13.9 million
from $14 million in the year-earlier quarter. Consequently,
operating margin contracted 100 basis points to 15%.
As of Sep 30, 2013, cash and cash equivalents amounted to $4.6
million compared with $6.5 million as of Dec 31, 2012.
Receivables increased to $56 million as of Sep 30, 2013 from
$45.6 million as of Dec 31, 2012. Inventories decreased to $54.4
million as of Sep 30, 2013, from $61 million as of Dec 31, 2012.
Badger Meter will continue to benefit from Elster business and
the ongoing economic recovery. In addition, replacement demand is
expected to recover and drive growth in water meter. Moreover,
Badger Meter will be benefited by improved volumes in both its
municipal and industrial product lines.
New product development is a key element of Badger Meter's growth
strategy and the company will continue to invest in new products
and product enhancements to meet growing customer needs.
On the flip side, the ongoing global economic weakness along with
subdued growth for automation sales may affect the performance of
Badger Meter, moving forward.
Headquartered in Milwaukee, Wisconsin, Badger Meter provides
liquid flow measurement products and control technologies serving
water and gas utilities, municipalities and industrial customers
worldwide. The company's products, which are developed both
internally and in collaboration with other technology companies,
are used in a wide variety of applications, including water, oil
Badger Meter currently retains a Zacks Rank #3 (Hold).
Thermon Group Holdings, Inc.
) also belongs to the same industry and holds a Zacks Rank #2
(Buy). Badger Meter's peers, such as
Roper Industries Inc.
) are yet to announce their third quarter results.