Badger Meter, Inc. (AMEX:BMI) today reported record sales and record earnings for the second quarter ended June 30, 2007.
Second Quarter Highlights
Net sales from continuing operations were a record $62,173,000 for the second quarter of 2007, a 5.7% increase from sales of $58,841,000 for the same period in 2006.
Earnings from continuing operations were a record $5,720,000 or $0.39 per diluted share for the second quarter of 2007, a 13.1% increase from earnings from continuing operations of $5,058,000 or $0.35 per diluted share for the second quarter of 2006.
Earnings from continuing operations exclude the results of the company’s French subsidiary, which has been classified as a discontinued operation in accordance with current accounting standards.
Net earnings were a record $5,468,000 for the second quarter of 2007, a 35.0% increase from net earnings of $4,049,000 for the same period in the prior year.
Diluted earnings per share were a record $0.38 for the second quarter of 2007, a 35.7% increase from earnings of $0.28 per diluted share for the second quarter of 2006.
Management has revised its estimate for the final cumulative charges for the liquidation of the French subsidiary and now believes it will not exceed $6.2 million, of which $5.6 million has already been recognized. The revised estimate is on the lower end of the company’s previously disclosed range of $6 to $8 million.
First Half 2007 Highlights
Net sales from continuing operations were $114,836,000 for the first two quarters of 2007, a 1.7% decrease from sales of $116,841,000 for the first half of 2006.
Earnings from continuing operations were $8,189,000 or $0.56 per diluted share for the first half of 2007, a 20.4% decrease from earnings from continuing operations of $10,290,000 or $0.72 per diluted share for the same period in 2006.
Net earnings were $8,040,000 for the first half of 2007, a 2.9% decrease from net earnings of $8,280,000 for the comparable prior period.
Diluted net earnings per share were $0.55 for the first half of 2007, a 5.2% decrease from diluted earnings per share of $0.58 for the first two quarters of 2006.
“This was an excellent quarter for Badger Meter, with second quarter sales and earnings that set new records for the quarter and for any quarter in our history. A double-digit increase in sales of our ORION® proprietary mobile radio frequency AMR system drove our strong second quarter performance. Sales in our industrial markets also increased, led by our impeller and automotive products,” said Richard A. Meeusen, chairman, president and chief executive officer of Badger Meter.
Meeusen said the earnings improvement reflected the higher sales and improvement in the profit margin. “ORION was a strong contributor to our increased earnings for the quarter because as a proprietary product, it has a higher margin than the AMR products we sell that are manufactured by other companies,” he said.
“We have been successful in passing on most of the increases in the costs of materials, particularly copper, which is a primary component of our water meters. On July 1, we announced another price increase to help offset the continuing increases in materials. We are also benefiting from cost savings achieved through the 2006 closing of our manufacturing facility in Rio Rico, Arizona, and the shift in production from that facility to Mexico. We recently broke ground on a second new plant in Nogales, Mexico, to accommodate the transfer of production from a nearby leased facility and from other locations as we continue to grow,” Meeusen said.
“We are continuing to invest in research and development for additional new products. Current projects include further enhancements to our highly successful ORION product and our GALAXY® fixed network system,” said Meeusen.
“Looking ahead, we expect shipments of the recently announced three-year $39.8 million ORION metering contract with the city of Chicago to begin this fall. Chicago will continue to use our line of plastic meters, which are as durable and reliable as brass meters but more economical given the volatility in copper prices. With the new contract and the continuing strong acceptance of ORION, we are optimistic about the remainder of 2007 and our continued growth over the long term,” Meeusen added.
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