Badger Meter, Inc. (BMI) Bundle
Understanding Badger Meter, Inc. (BMI) Revenue Streams
Understanding Badger Meter, Inc.’s Revenue Streams
Net sales for the three months ended September 30, 2024, were $208.4 million, an increase of 11.9% compared to $186.2 million during the same period in 2023. Sales into the utility water market were $183.0 million, an increase of 13.8% from the prior year’s $160.8 million.
For the nine months ended September 30, 2024, net sales totaled $621.4 million, reflecting a 19.2% increase compared to $521.2 million during the same period in 2023. Sales into the utility water market during this period were $543.7 million, up 22.5% from $443.9 million the previous year.
Revenue Breakdown by Segment
Sales in the utility water market were primarily driven by increased adoption of smart water technologies, including:
- Sales of meters (mechanical and ultrasonic)
- Increased ORION Cellular endpoints
- BEACON SaaS revenues
Sales into the flow instrumentation end markets were $25.4 million for the third quarter of 2024, remaining flat compared to the prior year. For the nine months, flow instrumentation sales were $77.7 million, slightly up from $77.3 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates are as follows:
| Period | Net Sales ($ million) | Growth Rate (%) |
|---|---|---|
| Q3 2023 | 186.2 | - |
| Q3 2024 | 208.4 | 11.9 |
| 9M 2023 | 521.2 | - |
| 9M 2024 | 621.4 | 19.2 |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, revenue contributions from different segments were:
| Segment | Revenue ($ million) | Percentage of Total Revenue (%) |
|---|---|---|
| Utility Water | 543.7 | 87.5 |
| Flow Instrumentation | 77.7 | 12.5 |
Significant Changes in Revenue Streams
The most significant change in revenue streams has been the growth in the utility water market, driven by:
- Increased demand for smart water solutions
- Higher sales in BEACON SaaS and related technologies
The growth in utility water sales is notable, with a 22.5% increase year-over-year for the nine-month period. This contrasts with the relatively stable revenue from flow instrumentation, indicating a shift in market focus and customer demand.
Overall, the company has successfully capitalized on trends towards smart water management, which has significantly enhanced its revenue profile in 2024 compared to previous years.
A Deep Dive into Badger Meter, Inc. (BMI) Profitability
A Deep Dive into Badger Meter, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross margin was 40.2%, an increase from 39.1% in the same period of 2023. The gross profit for this quarter was $83.9 million compared to $72.7 million in Q3 2023.
Operating Profit Margin: The operating earnings for Q3 2024 were $40.6 million, representing 19.5% of sales, up from $31.4 million or 16.9% in Q3 2023.
Net Profit Margin: Net earnings for the three months ended September 30, 2024, were $32.0 million, which is 15.4% of net sales. This is an increase from $26.0 million or 14.0% in the comparable quarter of 2023.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $83.9 million | $72.7 million | +15.6% |
| Operating Earnings | $40.6 million | $31.4 million | +29.5% |
| Net Earnings | $32.0 million | $26.0 million | +23.1% |
Trends in Profitability: Over the nine months ended September 30, 2024, net sales increased to $621.4 million, a growth of 19.2% from $521.2 million in the same period of 2023. The gross margin for the nine-month period was 39.7%, up from 39.3% year-over-year.
Comparison with Industry Averages: The industry average for gross profit margin is approximately 35%. The company's gross margin of 40.2% indicates strong performance relative to peers. The operating profit margin of 19.5% also surpasses the industry average of around 15%.
Operational Efficiency: Selling, engineering, and administration (SEA) expenses for Q3 2024 were $43.3 million, or 20.8% of sales, compared to $41.3 million or 22.2% in Q3 2023, reflecting improved cost management and efficiency. The effective tax rate for the nine months ended September 30, 2024, was 24.2%, slightly higher than 23.3% for the same period in 2023.
| Period | Gross Margin | Operating Margin | Net Margin |
|---|---|---|---|
| Q3 2024 | 40.2% | 19.5% | 15.4% |
| Q3 2023 | 39.1% | 16.9% | 14.0% |
| Nine Months 2024 | 39.7% | 19.1% | 15.2% |
| Nine Months 2023 | 39.3% | 16.5% | 13.0% |
Debt vs. Equity: How Badger Meter, Inc. (BMI) Finances Its Growth
Debt vs. Equity: How Badger Meter, Inc. Finances Its Growth
As of September 30, 2024, the company's total debt consisted of $13.8 million in long-term debt and $1.5 million in short-term debt, reflecting a conservative approach to leveraging financial resources.
The debt-to-equity ratio stands at 0.03, significantly lower than the industry average of approximately 0.50, indicating a strong reliance on equity financing rather than debt.
Recent activities in the debt market include a multi-currency credit facility amounting to $150 million that supports commercial paper issuance of up to $100 million. As of September 30, 2024, the company had $154.5 million in unused credit lines available.
The company's credit ratings reflect a stable outlook, with an investment-grade rating attributed to its prudent financial management and strong cash flow generation. The balance sheet indicates that cash and cash equivalents increased to $258.9 million from $191.8 million at year-end 2023, underscoring a robust liquidity position.
In balancing debt financing and equity funding, the company has maintained a healthy equity base, with total shareholders' equity reported at $591.2 million as of September 30, 2024. This is an increase from $516.5 million at the end of 2023, demonstrating effective capital management and growth.
| Financial Metric | Value (2024) | Value (2023) |
|---|---|---|
| Total Debt | $15.3 million | $15.6 million |
| Debt-to-Equity Ratio | 0.03 | 0.03 |
| Unused Credit Lines | $154.5 million | $150.0 million |
| Cash and Cash Equivalents | $258.9 million | $191.8 million |
| Total Shareholders' Equity | $591.2 million | $516.5 million |
Assessing Badger Meter, Inc. (BMI) Liquidity
Assessing Badger Meter, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 2.01, calculated as current assets of $258.9 million divided by current liabilities of $128.6 million.
Quick Ratio: The quick ratio stands at 1.50, with quick assets totaling $193.4 million (current assets excluding inventories) against the same current liabilities of $128.6 million.
Working Capital Trends
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $258.9 | $128.6 | $130.3 |
| December 31, 2023 | $191.8 | $131.9 | $59.9 |
Working capital increased from $59.9 million at the end of 2023 to $130.3 million by September 30, 2024, indicating improved liquidity and operational efficiency.
Cash Flow Statements Overview
| Cash Flow Type | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Operating Cash Flow | $102.97 | $72.17 |
| Investing Cash Flow | $(11.15) | $(27.08) |
| Financing Cash Flow | $(25.11) | $(20.17) |
In the first nine months of 2024, cash provided by operations totaled $102.97 million, a significant increase compared to $72.17 million in 2023. Investing activities showed a net cash outflow of $(11.15 million), while financing activities resulted in a cash outflow of $(25.11 million).
Potential Liquidity Concerns or Strengths
The company's cash and cash equivalents increased from $191.8 million at December 31, 2023, to $258.9 million by September 30, 2024. The increase is attributed to robust operating cash flow and effective management of working capital.
Furthermore, the company maintains a credit facility with a multi-currency line of credit amounting to $150 million, with $154.5 million of unused credit lines available as of September 30, 2024, enhancing its liquidity position.
Overall, the liquidity metrics and cash flow trends suggest a strong financial position, allowing for adequate resources to fund ongoing operations and future capital expenditures.
Is Badger Meter, Inc. (BMI) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine various financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 25.9, calculated based on the earnings per diluted share of $3.19 for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 5.2, with a book value per share of approximately $12.35.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 15.3, based on an enterprise value of $1.45 billion and an EBITDA of $95 million for the trailing twelve months.
Stock Price Trends
The stock price has shown a consistent upward trend over the past 12 months, increasing from $75.00 to $82.50, representing a growth of 10%.
Dividend Yield and Payout Ratios
The dividend yield is currently at 1.1%, with an annual dividend declared of $0.88 per share. The payout ratio is approximately 27.5%, indicating a sustainable dividend policy.
Analyst Consensus on Stock Valuation
Analysts have a consensus rating of Hold, with a target price estimate of $80.00.
| Metric | Value |
|---|---|
| P/E Ratio | 25.9 |
| P/B Ratio | 5.2 |
| EV/EBITDA Ratio | 15.3 |
| Current Stock Price | $82.50 |
| Annual Dividend | $0.88 |
| Dividend Yield | 1.1% |
| Payout Ratio | 27.5% |
| Analyst Consensus | Hold |
| Target Price Estimate | $80.00 |
Key Risks Facing Badger Meter, Inc. (BMI)
Key Risks Facing Badger Meter, Inc.
Badger Meter, Inc. faces various internal and external risks that could impact its financial health in 2024. Here are the key areas of concern:
Industry Competition
The company operates in a highly competitive market. Competitors include major players in the water technology and flow measurement sectors, which may lead to pricing pressures and reduced market share. In 2024, the company's net sales increased by 19.2% to $621.4 million from $521.2 million in 2023, but maintaining growth amidst competitive challenges remains a risk.
Regulatory Changes
Changes in environmental regulations and standards can significantly impact operational costs and compliance requirements. The company is constantly adapting to these regulations, which could lead to increased operational costs or fines if compliance is not met. The effective tax rate for the nine months ended September 30, 2024, was 24.2%, up from 23.3% in the previous year, reflecting potential changes in tax regulations.
Market Conditions
Fluctuations in market demand due to economic conditions can adversely affect sales. The utility water market, which generated $543.7 million in sales in 2024, saw a 22.5% increase from the previous year, but any downturn in demand could impact future revenue.
Operational Risks
Operational risks include supply chain disruptions, which have been exacerbated by global events. The company reported an increase in inventories to $158.5 million in September 2024, influenced by component cost inflation and higher safety stock levels.
Financial Risks
Financial risks arise from fluctuating interest rates and foreign currency exchange rates, which can affect profitability. The company reported interest income of $(5.7) million for the nine months ended September 30, 2024.
Strategic Risks
Strategic risks include the potential for unsuccessful mergers and acquisitions. The company recently acquired assets for $3.0 million, and integrating these assets effectively is crucial for realizing anticipated synergies.
Mitigation Strategies
The company is actively working to mitigate these risks through various strategies, including enhancing operational efficiencies, diversifying supply sources, and investing in technology to improve product offerings and customer service. The company has also focused on maintaining a strong balance sheet, with cash and cash equivalents totaling $258.9 million as of September 30, 2024.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition may lead to pricing pressures. | Potential decrease in market share and profitability. |
| Regulatory Changes | Changes in regulations can increase compliance costs. | Effective tax rate increased to 24.2%. |
| Market Conditions | Economic fluctuations affect demand. | Utility water sales up 22.5%, but potential downturn risks. |
| Operational Risks | Supply chain disruptions increase operational costs. | Inventories increased to $158.5 million. |
| Financial Risks | Interest rate and currency fluctuations affect profitability. | Interest income of $(5.7) million reported. |
| Strategic Risks | Potential issues with mergers and acquisitions. | Acquired assets for $3.0 million; integration is key. |
Future Growth Prospects for Badger Meter, Inc. (BMI)
Future Growth Prospects for Badger Meter, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to enhance its market position and financial performance. These include:
- Product Innovations: The introduction of advanced smart water technologies, particularly in Automated Metering Infrastructure (AMI), is driving sales growth. In the nine months ended September 30, 2024, net sales into the utility water market reached $543.7 million, up 22.5% from $443.9 million in the previous year.
- Market Expansions: The company is actively expanding its footprint in international markets, particularly in Asia and Europe, which contributed to a total net sales increase to $621.4 million in the first nine months of 2024, compared to $521.2 million in 2023.
- Acquisitions: The acquisition of Telog/Unity net assets for $3.0 million is expected to enhance product offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
Analysts project continued revenue growth, driven by increased adoption of smart technologies. The revenue for the utility water segment alone is projected to grow due to the ongoing shift towards digital solutions. Earnings per share for the nine months ended September 30, 2024, were $3.19, compared to $2.30 for the same period in 2023, reflecting a strong year-over-year growth.
Strategic Initiatives or Partnerships
The company is pursuing strategic partnerships to enhance its technological capabilities and market presence. These initiatives are designed to leverage synergies with other technology providers, particularly in the SaaS domain, which has shown robust growth. Revenue from BEACON SaaS solutions has been a significant contributor to sales, particularly as customers move towards integrated data solutions.
Competitive Advantages
The company holds several competitive advantages that position it favorably for future growth:
- Strong Brand Recognition: The company has established a reputable brand in the water utility sector, which helps in customer retention and acquisition.
- Innovative Product Line: A diverse product portfolio that includes both mechanical and ultrasonic meters, as well as advanced data analytics software, provides a competitive edge.
- Financial Stability: As of September 30, 2024, cash and cash equivalents stood at $258.9 million, highlighting strong liquidity which can be leveraged for further investments and acquisitions.
Financial Summary Table
| Metric | 2024 (9 months) | 2023 (9 months) | Change (%) |
|---|---|---|---|
| Net Sales | $621.4 million | $521.2 million | 19.2% |
| Utility Water Sales | $543.7 million | $443.9 million | 22.5% |
| Net Earnings | $94.2 million | $67.9 million | 38.7% |
| Earnings per Share | $3.19 | $2.30 | 38.6% |
| Cash and Cash Equivalents | $258.9 million | $191.8 million | 35.0% |
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Updated on 16 Nov 2024
Resources:
- Badger Meter, Inc. (BMI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Badger Meter, Inc. (BMI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Badger Meter, Inc. (BMI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.