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Badger Meter Reports Third Quarter Results

The following excerpt is from the company's SEC filing.

MILWAUKEE--(BUSINESS WIRE)--October 19, 2015--Badger Meter, Inc. (NYSE: BMI) today reported results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights

Net sales were a record $99,388,000 for the third quarter of 2015, a 3.2% increase from sales of $96,271,000 for the third quarter of 2014.

Net earnings were $8,327,000 for the third quarter of 2015, an 18.6% decrease from net earnings of $10,231,000 for the third quarter of 2014.

Diluted earnings per share were $0.58 for the t hird quarter of 2015, an 18.3% decrease from diluted earnings per share of $0.71 for the third quarter of 2014.

First Nine Months 2015 Highlights

Net sales were $281,928,000 for the first three quarters of 2015, a 2.4% increase from sales of $275,429,000 for the first three quarters of 2014.

Net earnings were $20,455,000 for the first three quarters of 2015, a 13.6% decrease from net earnings of $23,677,000 for the first three quarters of 2014.

Diluted earnings per share were $1.42 for the first three quarters of 2015, a 14.5% decrease from diluted earnings per share of $1.66 for the first three quarters of 2014.

Operations Review

“While sales set a new record for any quarter in our history, our overall performance was not at the level we anticipated. Sales of municipal water products were up over the prior year quarter and National Meter & Automation again made a positive contribution. However, flow instrumentation product sales were down. Net earnings were impacted by a number of factors including a lower profit margin and a higher tax rate,” said Richard A. Meeusen, chairman, president and chief executive officer of Badger Meter.

“Sales of both residential and commercial municipal water products increased in the third quarter, with strong sales of our newest products, including E-Series

Ultrasonic meters and BEACON

Advanced Metering Analytics (AMA) software and ORION

cellular endpoints. Sales of municipal water products would have been even higher if not for a product issue at one of our alliance partners. We estimate approximately $4.5 million in potential sales were delayed in the third quarter because of this issue. We believe these sales will be recouped over the next several quarters,” said Meeusen. He added that the decrease in flow instrumentation product sales was due to continued weakness in the oil and gas market, the impact of the weaker Euro and softness in the general economy, particularly production capacity expansion in the process markets.

The gross profit margin was 36.3% for the third quarter of 2015, compared to 37.9% for the third quarter of 2014. The decrease was due to product mix, with increased sales of municipal water products and lower sales of generally higher margin flow instrumentation products, higher health care costs and a one-time write-off of older gas radio inventory. This was offset in part by incremental profit from National Meter and favorable brass costs.

In addition to the lower profit margin, net earnings were impacted by higher selling, engineering and administration expenses due to the National Meter acquisition and a higher third-quarter tax rate that resulted from a tax reserve adjustment in conjunction with the filing of the company’s 2014 tax return.

Summary

“While the overall economy is not growing as fast as we would like, we are optimistic about the opportunities we have with our successful new products, new products under development and sales of our alliance partner’s products that have been pushed into the next few quarters. We believe we are well positioned for profitable growth in the long term,” said Meeusen.

Conference Call and...


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