Badger Meter, Inc. (NYSE:BMI) announced record third-quarter sales of $186.2 million, marking a 26% increase compared to the same period in 2022. The company attributed this growth to robust demand for its digital smart water solutions and improved supply chain conditions. The earnings call highlighted the company's strategic investments and focus on organic growth, with expectations of sustained high single-digit growth over a 5-10 year cycle.
Key takeaways from the earnings call:
- Badger Meter reported a significant increase in operating margins to 16.9% and a 44% growth in earnings per share (EPS) to $0.88.
- The company anticipates solid year-over-year sales growth for the remainder of 2023, despite a potential sequential decline in Q4 due to fewer working days.
- Badger Meter maintains a strong deal pipeline for potential acquisitions and expects to leverage selling and administration expenses (SEA) for growth.
- The company seeks to expand its addressable market through acquisitions and software development, targeting niche opportunities in the water quality sector.
During the call, Bob Wrocklage, a representative from Badger Meter, emphasized the company's improved SEA leverage over the past three years and its focus on organic investment as a top capital allocation priority. Ken Bockhorst, another representative, highlighted how acquisitions like ATi, s::can, and Syrinix have opened up larger markets for the company. The company's strategy includes targeting niche opportunities and developing software to penetrate these markets.
Badger Meter's robust sales growth and strategic investments underscore its commitment to capitalizing on the expanding market for water solutions. The company's management remains focused on improving lead times and reducing backlog to ensure continued growth. The year-end earnings call is tentatively scheduled for January 26, 2024.
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