Badger Meter, Inc. reports 19.6% Net Income decline in 2018 and 1.4 pp EBITDA Margin decline from 20.1% to 18.7%
02/05/2019 • About Badger Meter, Inc. (
$BMI) • By InTwits
Badger Meter, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Badger Meter, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $88m in 2018, $111m in 2017, $59m in 2016, $133m in 2015, $58m in 2014
- The company has highly profitable business model: ROIC is 17.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.1x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Badger Meter, Inc.'s Revenue increased on 7.8%. Revenue growth showed acceleration in 18Q4 - it increased 8.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.9 pp from 18.2% to 22.1% in 2018.
Gross Margin decreased slightly on 1.3 pp from 38.7% to 37.4% in 2018. SG&A as a % of Revenue showed almost no change in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2016 at 25.3% and was declining since that time.
Net Income margin decreased on 2.2 pp from 8.6% to 6.4% in 2018.
Investments (CAPEX, working capital and M&A)
Badger Meter, Inc.'s CAPEX/Revenue was 2.0% in 2018. Badger Meter, Inc. showed decline in CAPEX/Revenue of 3.2 pp from 5.2% in 2015 to 2.0% in 2018. It's average CAPEX/Revenue for the last three years was 2.8%.
Return on investment
The company operates at good ROIC (17.6%) while ROE is low (9.6%). ROIC decreased slightly on 0.65 pp from 18.2% to 17.6% in 2018. ROE decreased on 3.4 pp from 13.0% to 9.6% in 2018.
Leverage (Debt)
Debt level is 0.1x Net Debt / EBITDA and 0.2x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 0.4x to 0.1x in 2018. Debt dropped on 59.5% while cash surged on 17.2%. Net Debt/EBITDA stuck to a declining trend at -0.3x per annum in 2014-2018.
Badger Meter, Inc. has short term refinancing risk: cash is only 72.5% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 21.1x and P/E 61.5x.
Management team
Kenneth C Bockhorst "Ken" is a Badger Meter, Inc.'s CEO. Kenneth C Bockhorst "Ken" is a founder and has spent 0 years with the company. Robert A Wrocklage "Bob" is a the company's CFO. Robert A Wrocklage "Bob" has spent 0 years at the company.
Financial and operational results
FY ended 12/31/2018
Badger Meter, Inc. ($BMI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 364.8 | 377.7 | 393.8 | 402.4 | 433.7 | 7.8% |
| Gross Profit | 131.1 | 135.8 | 150.6 | 155.7 | 162.3 | 4.2% |
| SG&A | 75.6 | 82.8 | 99.8 | 99.2 | 105.5 | 6.4% |
| EBITDA | 61.7 | 63.0 | 73.2 | 81.0 | 81.2 | 0.2% |
| Net Income | 29.7 | 25.9 | 32.3 | 34.6 | 27.8 | -19.6% |
Balance Sheet
|
|---|
| Cash | 6.7 | 8.2 | 7.3 | 11.2 | 13.1 | 17.2% |
| Short Term Debt | 75.9 | 71.4 | 38.0 | 44.6 | 18.1 | -59.5% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 12.3 | 19.8 | 10.6 | 15.1 | 8.6 | -42.6% |
Ratios
|
|---|
| Revenue growth | 9.2% | 3.5% | 4.3% | 2.2% | 7.8% | |
| EBITDA growth | 17.3% | 2.0% | 16.3% | 10.6% | 0.2% | |
|
|---|
| Gross Margin | 36.0% | 35.9% | 38.2% | 38.7% | 37.4% | -1.3% |
| EBITDA Margin | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% | -1.4% |
| SG&A, % of revenue | 20.7% | 21.9% | 25.3% | 24.6% | 24.3% | -0.3% |
| Net Income Margin | 8.1% | 6.9% | 8.2% | 8.6% | 6.4% | -2.2% |
| CAPEX, % of revenue | 3.4% | 5.2% | 2.7% | 3.7% | 2.0% | -1.8% |
|
|---|
| ROIC | 16.5% | 14.3% | 16.9% | 18.2% | 17.6% | -0.6% |
| ROE | 14.4% | 11.6% | 13.2% | 13.0% | 9.6% | -3.4% |
| Net Debt/EBITDA | 1.1x | 1.0x | 0.4x | 0.4x | 0.1x | -0.4x |
Badger Meter, Inc. ($BMI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 105 | 114 | 111 | 104 | | 3.4% | 9.1% | 10.6% | 8.0% |
| EBITDA | 17 | 22 | 22 | 21 | | -13.7% | -2.8% | 17.1% | 2.7% |
| Net Income | 8 | 6 | 3 | 11 | | -13.8% | -42.0% | -64.3% | 55.4% |
Balance Sheet
|
|---|
| Cash | 14 | 12 | 11 | 13 | | 19.6% | -12.5% | -20.6% | 17.2% |
| Short Term Debt | 48 | 42 | 36 | 18 | | 26.2% | -6.9% | -20.0% | -59.5% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 35.0% | 36.5% | 39.7% | 38.5% | | -3.1% | -2.9% | 2.7% | -1.9% |
| EBITDA Margin | 15.9% | 19.4% | 19.7% | 19.8% | | -3.1% | -2.4% | 1.1% | -1.0% |
| Net Income Margin | 7.2% | 5.4% | 2.6% | 10.8% | | -1.4% | -4.8% | -5.4% | 3.3% |
Peers in Electronic Equipment & Instrum
Below we provide Badger Meter, Inc. benchmarking against other companies in Electronic Equipment & Instrum industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 4.5% | 0.3% | 4.6% | 10.4% |
|---|
| Badger Meter, Inc. ($BMI) | | 3.5% | 4.3% | 2.2% | 7.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 42.0% |
|---|
| Badger Meter, Inc. ($BMI) | 36.0% | 35.9% | 38.2% | 38.7% | 37.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| Badger Meter, Inc. ($BMI) | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.3% |
|---|
| Badger Meter, Inc. ($BMI) | 3.4% | 5.2% | 2.7% | 3.7% | 2.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.9% |
|---|
| Badger Meter, Inc. ($BMI) | 16.5% | 14.3% | 16.9% | 18.2% | 17.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| Badger Meter, Inc. ($BMI) | 1.1x | 1.0x | 0.4x | 0.4x | 0.1x |
