Badger Meter (BMI) Q1 Earnings Beat Estimates, Revenues Miss

Badger Meter, Inc. BMI reported healthy first-quarter 2019 financial results with year-over-year increase in earnings on the back of strong growth dynamics.

Net Income

Net earnings for the quarter were $10.8 million or 37 cents per share compared with $7.5 million or 26 cents per share in the year-ago quarter, primarily driven by lower cost of sales. The figure beat the Zacks Consensus Estimate by a penny.

Badger Meter, Inc. Price, Consensus and EPS Surprise

Badger Meter, Inc. Price, Consensus and EPS Surprise | Badger Meter, Inc. Quote

Revenues

Net sales were $104.9 million compared with $105 million in the year-ago quarter, reflecting higher domestic revenues, volumes of new technology meters and favorable product mix with higher-than-average growth of ultrasonic meters, radios and service revenues.

However, sales were impacted by inclement weather and deferred orders by customers awaiting the company’s next generation large static meters and LTE-M radio products. The top line lagged the Zacks Consensus Estimate of $111 million.

Other Details

Cost of sales decreased from $68.3 million to $64.4 million. Gross profit came in at $40.5 million, up from $36.7 million in the year-earlier quarter for respective margins of 38.6% and 35%. Operating earnings were $14.3 million or 13.7% of sales, which improved 420 basis points year over year.

Notably, Badger Meter has announced technology wins with Columbia, SC and Aurora, CO, which highlight the increasing market acceptance for cellular as the standard Advanced Metering Infrastructure solution for water utilities.

Cash Flow & Liquidity

During the first quarter, Badger Meter generated $17.8 million of net cash from operations compared with $6.8 million in the year-ago period. Free cash flow was about $15.7 million compared with $3.7 million in the prior-year period. As of Mar 31, 2019, the company had a cash balance of $15 million with $11 million of short-term debt.

Going Forward

Management remains optimistic about the company’s prospects through 2019, supported by a number of reasons such as 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 CommScope Holding Company, Inc. COMM, Bandwidth Inc. BAND and Zayo Group Holdings, Inc. ZAYO. While CommScope sports a Zacks Rank #1 (Strong Buy), Bandwidth and Zayo carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CommScope has long-term earnings growth expectation of 4%.

Bandwidth has long-term earnings growth expectation of 10%.

Zayo has long-term earnings growth expectation of 5%.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>

Is your investment advisor fumbling your financial future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.” Click to get your free report.
 
Zayo Group Holdings, Inc. (ZAYO) : Free Stock Analysis Report
 
CommScope Holding Company, Inc. (COMM) : Free Stock Analysis Report
 
Badger Meter, Inc. (BMI) : Free Stock Analysis Report
 
Bandwidth Inc. (BAND) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research