WEB NEWS Comments & Business Outlook
First Quarter 2012 Results
The acquisition of Racine Federated, Inc., the largest in Badger Meter’s history, was completed on January 31, 2012.
Net sales were $76,233,000 for the first quarter of 2012, a 32.9% increase from sales of $57,359,000 for the first quarter of 2011. The first quarter 2012 sales included $7.4 million from Racine Federated.
Net earnings were $6,249,000 for the first quarter of 2012, a 91.7% increase from net earnings of $3,260,000 for the first quarter of 2011.
Diluted earnings per share were $0.42 for the first quarter of 2012, a 90.9% increase from diluted earnings per share of $0.22 for the first quarter of 2011. Racine Federated contributed approximately $0.03 to diluted earnings per share.
“We are pleased with our strong first quarter performance. As we anticipated, utilities in the municipal water market returned to more normal buying patterns during the quarter. We are seeing more stability in the market than we did last year, which was negatively impacted by a slowdown in purchasing by municipalities due to uncertainties about the economy and potential budget reductions,” said Richard A. Meeusen, chairman, president and chief executive officer of Badger Meter.
Meeusen said the first quarter sales increase was led by higher sales of Badger Meter’s ORION® family of metering technology systems for the municipal water market and the addition of Racine Federated, Inc. on January 31, which contributed to higher sales of industrial flow products. The sales increases were slightly offset by reduced sales of specialty products due primarily to fewer sales of the ORION® metering system for natural gas utilities to one particular customer in the first quarter of 2012 than in last year’s first quarter.
The gross profit margin was 37.9% for the first quarter of 2012, compared to 35.6% for the first quarter of 2011 and 31.9% for the fourth quarter of 2011. “The improvement was due to the higher sales volumes and the addition of Racine Federated, whose products typically have higher margins overall,” said Meeusen. He noted that the increased selling, engineering and administration expenses in the first quarter also reflected the addition of Racine Federated.
“The integration of Racine Federated is going very well. The company is an excellent fit for Badger Meter, enabling us to offer a broader portfolio of flow technologies and products to customers of both companies. The acquisition significantly expands our presence in the industrial flow market and we look forward to continuing to grow this business,” said Meeusen.
“The $30 million stock repurchase program recently authorized by our Board of Directors commenced in the first quarter but did not have a significant impact on earnings per share. We repurchased 520,000 shares of common stock for approximately $17 million during the first quarter,” said Meeusen. “After the share repurchases and the Racine Federated acquisition, our debt-to-total capitalization ratio is 28%. We are financially strong, positioned for growth and expect continued positive cash flow.”
“The year is off to a solid start. While the economy continues to be a concern and we have a difficult comparison against last year’s record second quarter, we remain optimistic about 2012,” added Meeusen.
