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Badger Meter (BMI) Q2 Earnings & Revenues Lag Estimates
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Badger Meter, Inc. (BMI - Free Report) reported relatively lackluster second-quarter 2019 results with year-over-year decrease in revenues and adjusted earnings due to order postponements.
Net Income
Net earnings for the reported quarter were $11.4 million or 39 cents per share compared with $6.2 million or 21 cents per share in the year-ago quarter, primarily driven by lower cost of sales. Notably, second-quarter 2018 earnings were negatively impacted by higher pension and retirement charges.
Adjusted earnings for the reported quarter were 39 cents per share compared with 42 cents in the year-earlier quarter. Adjusted earnings missed the Zacks Consensus Estimate by 8 cents.
Badger Meter, Inc. Price, Consensus and EPS Surprise
Net sales were $103.5 million compared with $113.6 million in the year-ago quarter as customers largely deferred orders awaiting the company’s next generation large static meters and LTE-M radio products. The top line lagged the consensus estimate of $117 million.
Other Details
Cost of sales decreased from $72.1 million to $63.3 million due to stringent cost-cutting exercises. Gross profit was $40.3 million, down from $41.5 million in the year-earlier quarter, the respective margins being 38.9% and 36.5%. Despite lower sales revenues, gross margin improved year over year due to positive product and regional sales mix, as well as favorable price dynamics as brass input costs remained lower. Operating earnings were $15 million or 14.5% of sales, which improved 10 basis points year over year.
Notably, Badger Meter advanced the launch process of the new three- and four-inch commercial E-Series Ultrasonic meters. The company continued its thrust on innovating new products, owing to which customers deferred orders to obtain the latest version of advanced technology products.
Cash Flow & Liquidity
During the second quarter, Badger Meter generated $23.1 million of net cash from operations compared with $18.4 million a year ago, bringing the tally for first-half 2019 and first-half 2018 to $40.9 million and $25.2 million, respectively. Free cash flow was about $20.8 million, up 28% from the prior-year quarter. As of Jun 30, 2019, the company had a cash balance of $23.9 million with $4.6 million of short-term debt.
Moving Forward
Management remains optimistic about the company’s long-term prospects, supported by a solid backlog, customer acceptance of its new products and lower brass input costs.
The company is poised to gain from strong order rates for innovative water solutions, including newly launched larger size E-Series Ultrasonic meters and ORION Cellular LTE-M radios. It aims to enhance shareholder value through organic and inorganic investments on the back of its solid balance sheet.
Zacks Rank & Stocks to Consider
Badger Meter currently has a Zacks Rank #4 (Sell).
Thermon Group delivered a positive earnings surprise of 67.4% in the trailing four quarters.
Transcat has long-term earnings growth expectation of 8%. It pulled off a positive earnings surprise of 11.2% in the trailing four quarters.
Watts Water has long-term earnings growth expectation of 8%. It delivered a positive earnings surprise of 2.6% in the trailing four quarters.
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Badger Meter (BMI) Q2 Earnings & Revenues Lag Estimates
Badger Meter, Inc. (BMI - Free Report) reported relatively lackluster second-quarter 2019 results with year-over-year decrease in revenues and adjusted earnings due to order postponements.
Net Income
Net earnings for the reported quarter were $11.4 million or 39 cents per share compared with $6.2 million or 21 cents per share in the year-ago quarter, primarily driven by lower cost of sales. Notably, second-quarter 2018 earnings were negatively impacted by higher pension and retirement charges.
Adjusted earnings for the reported quarter were 39 cents per share compared with 42 cents in the year-earlier quarter. Adjusted earnings missed the Zacks Consensus Estimate by 8 cents.
Badger Meter, Inc. Price, Consensus and EPS Surprise
Badger Meter, Inc. price-consensus-eps-surprise-chart | Badger Meter, Inc. Quote
Revenues
Net sales were $103.5 million compared with $113.6 million in the year-ago quarter as customers largely deferred orders awaiting the company’s next generation large static meters and LTE-M radio products. The top line lagged the consensus estimate of $117 million.
Other Details
Cost of sales decreased from $72.1 million to $63.3 million due to stringent cost-cutting exercises. Gross profit was $40.3 million, down from $41.5 million in the year-earlier quarter, the respective margins being 38.9% and 36.5%. Despite lower sales revenues, gross margin improved year over year due to positive product and regional sales mix, as well as favorable price dynamics as brass input costs remained lower. Operating earnings were $15 million or 14.5% of sales, which improved 10 basis points year over year.
Notably, Badger Meter advanced the launch process of the new three- and four-inch commercial E-Series Ultrasonic meters. The company continued its thrust on innovating new products, owing to which customers deferred orders to obtain the latest version of advanced technology products.
Cash Flow & Liquidity
During the second quarter, Badger Meter generated $23.1 million of net cash from operations compared with $18.4 million a year ago, bringing the tally for first-half 2019 and first-half 2018 to $40.9 million and $25.2 million, respectively. Free cash flow was about $20.8 million, up 28% from the prior-year quarter. As of Jun 30, 2019, the company had a cash balance of $23.9 million with $4.6 million of short-term debt.
Moving Forward
Management remains optimistic about the company’s long-term prospects, supported by a solid backlog, customer acceptance of its new products and lower brass input costs.
The company is poised to gain from strong order rates for innovative water solutions, including newly launched larger size E-Series Ultrasonic meters and ORION Cellular LTE-M radios. It aims to enhance shareholder value through organic and inorganic investments on the back of its solid balance sheet.
Zacks Rank & Stocks to Consider
Badger Meter currently has a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader industry are Thermon Group Holdings, Inc. (THR - Free Report) and Transcat, Inc. (TRNS - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Watts Water Technologies, Inc. (WTS - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermon Group delivered a positive earnings surprise of 67.4% in the trailing four quarters.
Transcat has long-term earnings growth expectation of 8%. It pulled off a positive earnings surprise of 11.2% in the trailing four quarters.
Watts Water has long-term earnings growth expectation of 8%. It delivered a positive earnings surprise of 2.6% in the trailing four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>