Badger Meter, Inc. · NYSE:BMI
Badger Meter — Investor Presentation (July 2020)
24 slides from Badger Meter's investor presentation, July 2020
Slide 1: Badger Meter, Inc. Standard Investor Presentation
BADGER METER, INC. STANDARD INVESTOR PRESENTATION July 2020 © 2020 Badger Meter, Inc. 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements contained in this presentation, as well as other information provided from time to time by Badger Meter, Inc. (the “company”) or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to
Slide 3: Second Quarter Financial Snapshot
SECOND QUARTER FINANCIAL SNAPSHOT (US$ in millions, except per share data) Q2 2020 Q2 2019 Change • Municipal water sales declined 9% with April trough in demand, improved Sales $91.1 $103.5 -12.0% thereafter. Build of backlog with manufacturing disruption. Mix favorable Gross Margin 35.9 40.3 -11.2
Slide 4: Current Environment
CURRENT ENVIRONMENT • Overall activity in end markets stabilized to varying degrees after April trough • Municipal projects/bids/orders proceeding, with some isolated delays as remote work and virtual approval processes impact timing • Flow instrumentation industrial markets “lower for longer” • Sup
Slide 5: Outlook
OUTLOOK • Economic environment stabilizing, solid backlog and bid pipeline • Continued uncertainty could weigh on demand and municipal budgets longer term • Focus on what we can control: • Investing in R&D / launch of new products – E-Series Ultrasonic Plus meter with integrated control valve • Adap
Slide 6: Background Information
BACKGROUND INFORMATION © 2020 Badger Meter, Inc. 6
Slide 7: Badger Meter Is a Water Focused, Flow Measurement Leader
BADGER METER IS A WATER FOCUSED, FLOW MEASUREMENT LEADER 89% WATER • Integrated technology company providing a RELATED comprehensive suite of flow measurement, connectivity BUSINESS and software / analytics solutions to a diverse customer base • Industry leader in North American water metering, with
Slide 8: Competitive Advantages – Why Badger Meter Wins
COMPETITIVE ADVANTAGES – WHY BADGER METER WINS >50K Water Utilities in US Broadest Range of Offerings • Brass and polymer – Choice Matters • Mechanical and static (ultrasonic) Utility Size and their Share of • Drive by, fixed and cellular radio technology Meter connections Technology Leadership • We
Slide 9: Cellular Communication vs. Fixed Network
CELLULAR COMMUNICATION VS. FIXED NETWORK • Easy • Flexible • Resilient • Savings • Standard LTE-M Cellular Communication Technology – Example of Innovation Leadership © 2020 Badger Meter, Inc. 9
Slide 10: Smart Water Acceleration
SMART WATER ACCELERATION The Business Case The Solutions Why are utilities willing to pay more? How our leading technologies deliver • Reduce non-revenue water (NRW) • Meters • Mechanical meters lose some accuracy over • Static (E-series ultrasonic) holds accuracy over time lifetime; commercial size
Slide 11: Strategic Framework
STRATEGIC FRAMEWORK Preserve the legacy of trusted Accelerate customer-focused growth Execution as a differentiator and Disciplined investment where solutions, broad offerings and • Emphasis on profitable growth value driver there is a compelling competitive innovation earned since Badger over quant
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Internal Investment to support organic growth and sustain core business Grow the dividend annually in line with earnings Accelerate acquisitions that align to strategy and return targets Historically Future Guidelines Approximate percent spend of gross operating cash fl
Slide 13: Utility Water-Integrated Solution Offering
UTILITY WATER-INTEGRATED SOLUTION OFFERING Mechanical Meters 1 Static Meters 1 • Broadest product offering - both mechanical 1 and static meters in both metal and polymer • Next generation E-Series Ultrasonic Meter METERS with D-Flow technology Recordall® Disc E-Series® Ultrasonic • Complete line of
Slide 14: Global Manufacturing and Innovation
GLOBAL MANUFACTURING AND INNOVATION LULEA SWEDEN Milwaukee MILWAUKEE POLAND BRNO DENVER STUTTGART RACINE LOS GATOS TULSA BERN NASHVILLE NOGALES MEXICO CITY SHANGHAI DUBAI SINGAPORE 7 Manufacturing Facilities 7 Sales/Warehouse Offices 2 Innovation / R&D Centers © 2020
Slide 15: Flow Measurement Methods
FLOW MEASUREMENT METHODS • Badger Meter offers eight of the ten Positive Displacement common flow technologies Turbine • North American water meter market Badger Meter Offering Ultrasonic primarily uses nutating disc meters, a type of positive displacement technology Magnetic • Global water meter ma
Slide 16: Water Metering Key Growth Strategies
WATER METERING KEY GROWTH STRATEGIES • Maintain leading position in the North American water metering market through continued development of leading-edge technologies for • Meters • Radios • Software • Penetrate and grow select international markets (e.g. Middle East) with leading solutions • Lever
Slide 17: Smart City Alliance
SMART CITY ALLIANCE • One of 11 companies aligned with AT&T to drive initiatives • Initiative includes improving utilization of limited budget resources • Efficient city operations • Deployment of resources • Service and delivery • Smart water metering increases utility revenue and drives conservati
Slide 18: Radio Connectivity - Penetration
RADIO CONNECTIVITY - PENETRATION MANUAL READ METERS WITH RADIOS $40-$50 price $150-$250 price per per meter system CONVERSION TO CONTINUE • Badger Meter was the first US company to offer radios on water meters (1988) • Radio connectivity allows for automated North American water meter market meterin
Slide 19: Cellular Technology Roadmap
CELLULAR TECHNOLOGY ROADMAP Advantages of Cellular Technology 2014 2015 2016 2017 2018 2019+ CONSUMER USE • Compared to fixed networks, no DATA COMPLEXITY LTE 5G infrastructure for the water utility LTE 2G/3G/4G to maintain (cost advantage) LTE CAT-1 • 100% coverage: no “hard-to- LTE CAT-M read” l
Slide 20: Flow Instrumentation Key Growth Strategies
FLOW INSTRUMENTATION KEY GROWTH STRATEGIES • Expand niche share by targeting four faster growing core markets: • Building Automation/HVAC/Sustainability • Water and Wastewater • Chemical/Petrochemical • Oil & Gas • Continue to expand new product development to target niche market gaps • Align with k
Slide 21: Strategic Acquisitions
STRATEGIC ACQUISITIONS Potential Steps in Process Acquisition Targets Criteria • Technology solutions that can be • Companies leveraged across both utility and flow Expanded List of Potential Targets previously tracked Flow measurement technologies New targets added instrumentation markets • • Senso
Slide 22: Acquisition History
ACQUISITION HISTORY Year Company Type Location Price Water Utility Instrumentation and Connectivity: 2018 Innovative Metering Distributor Tampa, FL $8M Solutions 2017 Carolina Meter Distributor Wilmington, NC $6M 2017 D-Flow Technology/R&D Lulea, Sweden $23M 2015 United Utilities Distributor Smyrna,
Slide 23: Annual Financial Trends
ANNUAL FINANCIAL TRENDS (US$ in millions, except per share data) • Sales growth driven primarily by smart water solution penetration 2017 2018 2019 Sales $402.4 $433.7 $424.6 • Radios and SaaS Adj Oper Earnings 56.6 59.4 62.2 • Margins driven predominately by 14.1% 13.7% 14.6% volume, price/cost and
Slide 24: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS EBITDA Free Cash Flow (US$ in millions) (US$ in millions) Q2 2020 Q2 2019 YTD 2020 YTD 2019 Q2 2020 Q2 2019 Net Earnings (GAAP) $9.5 $11.4 $21.4 $22.2 Cash from Ops (GAAP) $21.7 $23.1 Interest expense 0.1 0.1 0.1 0.2 Capital Expenditures (1.6) (2.3) Income tax provis