Badger Meter Reports First Quarter 2018 Results

MILWAUKEE–(BUSINESS WIRE)–Badger
Meter, Inc. (NYSE: BMI) today reported results for the first quarter
ended March 31, 2018.

First Quarter 2018 Highlights

• Net sales were a record $105,041,000 for the first quarter of 2018, a
  3.4% increase from sales of $101,606,000 for the first quarter of 2017.
• Net earnings were $7,546,000 for the first quarter of 2018, a 13.8%
  decrease from net earnings of $8,749,000 for the first quarter of 2017.
• Diluted earnings per share were $0.26 for the first quarter of 2018, a
  13.3% decrease from diluted earnings per share of $0.30 for the first
  quarter of 2017.

Operations Review

“Our first quarter net sales were a record for any quarter, helped by
increased BEACON® Advanced Metering Analytics (AMA)
revenue and the recent D-Flow® and Carolina Meter
acquisitions,” said Richard A. Meeusen, chairman, president and chief
executive officer of Badger Meter. In addition, this was another strong
quarter for flow instrumentation product sales, despite the planned
shutdown of our Scottsdale, Arizona location and transition of those
operations to our Racine, Wisconsin facility,” added Meeusen.

However, domestic municipal water meter sales were flat, caused in part
by a delay in several expected orders due to poor weather conditions in
a number of our key markets. We expect these delayed orders to be
shipped in the second and third quarters. Continued growth in
international sales helped offset the slow start in the domestic market,
including a sizable municipal water order received from the Middle East.
In addition, price increases on many products took effect at the
beginning of the year and will be fully realized over the next several
quarters.

As a result of the lower volumes’ impact on capacity utilization costs,
higher brass expenses and the Scottsdale shutdown costs, gross profit
margin was 35.0%, down from 38.0% in the first quarter of 2017. Selling,
engineering and administration costs were up 6.7% compared to the prior
year period, largely due to inclusion of expenses from the two
acquisitions made after the first quarter of 2017. As anticipated, the
company benefitted from a lower effective corporate tax rate.

“Despite the lower first quarter results, we remain optimistic about
2018, especially given the strength of our E-Series ultrasonic water
meters and the ORION Cellular endpoint radios, the positive sales
momentum going into the second quarter and the residual benefits we
expect to see from our price increases,” added Meeusen.

Conference Call and Webcast

Badger Meter management will hold a conference call to discuss the
company’s first quarter results on Wednesday, April 18, 2018, at 10:00
AM Central/11:00 AM Eastern time.

Interested parties can listen to the call live on the Internet through
the company’s website: www.badgermeter.com or
by dialing 1-844-281-9843 and entering the passcode 6482009. Listeners
should dial in to the call at least 5-10 minutes prior to the start of
the call or should go to the website at least 15 minutes prior to the
call to download and install any necessary audio software.

A telephone replay of the conference call will be available
through Wednesday, April 25, 2018, by dialing 1-855-859-2056 and
entering the passcode 6482009. The webcast will be archived on the
company’s website until its next earnings release.

About Badger Meter

Badger Meter is an innovator in flow measurement, control and
communications solutions, serving water utilities, municipalities, and
commercial and industrial customers worldwide. The Company’s products
measure water, oil, chemicals, and other fluids, and are known for
accuracy, long-lasting durability and for providing valuable and timely
measurement data. For more information, visit www.badgermeter.com.

Certain statements contained in this news release, 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
differ materially from those in the forward looking statements. The
words “anticipate,” “believe,” “estimate,” “expect,” “think,” “should,”
“could” and “objective” or similar expressions are intended to identify
forward looking statements. All such forward looking statements
are based on the Company’s then current views and assumptions and
involve risks and uncertainties. Some risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied in forward looking statements include those
described in Item 1A of the Company’s Annual Report on Form 10-K for the
year ended December 31, 2017 that include, among other things:

• the continued shift in the Company’s business from lower cost,
  manually read meters toward more expensive, value-added automatic
  meter reading (AMR) systems, advanced metering infrastructure (AMI)
  systems and advanced metering analytics (AMA) systems that offer more
  comprehensive solutions to customers’ metering needs;
• the success or failure of newer Company products;
• changes in competitive pricing and bids in both the domestic and
  foreign marketplaces, and particularly in continued intense price
  competition on government bid contracts for lower cost, manually read
  meters;
• the actions (or lack thereof) of the Company’s competitors;
• changes in the Company’s relationships with its alliance partners,
  primarily its alliance partners that provide radio solutions, and
  particularly those that sell products that do or may compete with the
  Company’s products;
• changes in the general health of the United States and foreign
  economies, including to some extent such things as the length and
  severity of global economic downturns, international or civil
  conflicts that affect international trade, the ability of municipal
  water utility customers to authorize and finance purchases of the
  Company’s products, the Company’s ability to obtain financing, housing
  starts in the United States, and overall industrial activity;
• unusual weather, weather patterns or other natural phenomena,
  including related economic and other ancillary effects of any such
  events;
• economic policy changes, including but not limited to, trade policy
  and corporate taxation;
• the timing and impact of government funding programs that stimulate
  national and global economies, as well as the impact of government
  budget cuts or partial shutdowns of governmental operations;
• changes in the cost and/or availability of needed raw materials and
  parts, such as volatility in the cost of brass castings as a result of
  fluctuations in commodity prices, particularly for copper and scrap
  metal at the supplier level, foreign-sourced electronic components as
  a result of currency exchange fluctuations and/or lead times, and
  plastic resin as a result of changes in petroleum and natural gas
  prices;
• the Company’s ability to successfully integrate acquired businesses
  or products;
• changes in foreign economic conditions, particularly currency
  fluctuations in the United States dollar, the Euro and the Mexican
  peso;
• the inability to develop technologically advanced products;
• the failure of the Company’s products to operate as intended;
• the inability to protect the Company’s proprietary rights to its
  products;
• the Company’s expanded role as a prime contractor for providing
  complete technology systems to governmental entities, which brings
  with it added risks, including but not limited to, the Company’s
  responsibility for subcontractor performance, additional costs and
  expenses if the Company and its subcontractors fail to meet the
  timetable agreed to with the governmental entity, and the Company’s
  expanded warranty and performance obligations;
• disruptions and other damages to information technology and other
  networks and operations due to breaches in data security or any other
  cybersecurity attack;
• transportation delays or interruptions;
• violations or alleged violations of the U.S. Foreign Corrupt
  Practices Act (FCPA) or other anti-corruption laws and the Foreign
  Account Tax Compliance provisions of the Hiring Incentives to Restore
  Employment Act (referred to as FATCA);
• the loss of or disruption in certain single-source suppliers; and
• changes in laws and regulations, particularly laws dealing with the
  content or handling of materials used in the Company's products.

All of these factors are beyond the Company's control to varying
degrees. Shareholders, potential investors and other readers are
urged to consider these factors carefully in evaluating the forward
looking statements contained in this news release and are cautioned not
to place undue reliance on such forward looking statements. The
forward looking statements made in this document are made only as of the
date of this document and the Company assumes no obligation, and
disclaims any obligation, to update any such forward looking statements
to reflect subsequent events or circumstances.

Badger Meter company news is available 24 hours a day, on-line at: http://www.badgermeter.com.

Contacts

Badger Meter, Inc.
Dawn O’Neill, (414) 371-7276