Badger Meter Inc.
) has reported second-quarter earnings per share (EPS) of 52 cents,
flat with the year-ago quarter and falling short of the Zacks
Consensus Estimate of 54 cents.
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Total revenue surged 9% on a year-over-year basis to $82 million in
the quarter, missing the Zacks Consensus Estimate of $86 million.
The acquisition of Racine Federated, Inc., added to the sales while
lower sales of ORION radio transmitters for natural gas meters due
to the completion of a large contract in 2011 was a partial offset.
Costs and Margins
Cost of sales increased 8% to $51.7 million in the reported
quarter. Gross profit improved 11% to $30 million in the
quarter from $27.2 million in the prior-year quarter. Gross margin
expanded 60 basis points year over year to 37.9% reflecting the
addition of higher-margin products from Racine Federated as well as
lower copper costs and a favorable product mix.
Selling, engineering and administration expenses increased 23% to
$18.8 million in the quarter also due to the acquisition of Racine
Federated and increased investments in research & development
and higher incentive accruals. Operating income declined 8% to
$11.3 million from $12.2 million in the year-earlier quarter.
Consequently, operating margins contracted 240 basis points to
13.9% in the quarter.
As of June 30, 2012, cash and cash equivalents amounted to $6.5
million compared with $6.6 million as of March 31, 2012.
Receivables as of remained flat at $51 million as of June 30, 2012
compared with March 31, 2012 end. Inventories increased to $61
million as of June 30, 2012 from $57.9 million as of March 31,
Earlier, in November 2011, Badger Meter management had authorized
the repurchase of up to $30 million of common stock over a period
of two years, which was completed in the second quarter. During the
quarter, the company repurchased 888,000 shares of common stock at
an average price of $33.78 per share.
The acquisition of Racine Federation, along with previously
acquired Cox Flow Measurement and Remag, is expected to boost the
flow measurement business globally. The acquisitions broadened the
product range and customer base for Badger Meter. The company's new
products, including the ORION SE advanced metering analytics system
and the electronic E-Series meter, are being well received by
The company will continue to benefit from customer preference for
the cost effective automatic meter reading (AMR) technology as well
as growing interest in advanced metering analytics (AMA). However,
continued uncertainty in municipal spending and increasing raw
material costs remain concerns. The company currently retains a
Zacks #1 Rank (short-term Strong Buy recommendation).
Milwaukee, Wisconsin-based Badger Meter provides liquid flow
measurement products and control technologies to utilities and
industrial customers. Presently, Badger Meter's product lines fall
into two broad categories - water applications and specialty
applications. Badger Meter competes with
Roper Industries Inc.