Badger Meter Reports Third Quarter 2017 Results

MILWAUKEE–(BUSINESS WIRE)–Badger
Meter, Inc. (NYSE: BMI) today reported third quarter results for the
quarter ended September 30, 2017.

Third Quarter 2017 Highlights

• Net sales of $100,008,000 for the third quarter of 2017 were a record
  for any third quarter and increased 3.9% from sales of $96,273,000 for
  the third quarter of 2016.
• Net earnings of $7,975,000 for the third quarter of 2017 decreased
  9.3% from net earnings of $8,792,000 for the third quarter of 2016.
• Diluted earnings per share of $0.27 for the third quarter of 2017
  decreased 10.0% from diluted earnings per share of $0.30 for the third
  quarter of 2016.

First Nine Months of 2017 Highlights

• Net sales were $305,790,000 for the first nine months of 2017, a 1.7%
  increase from net sales of $300,663,000 for the first nine months of
  2016.
• Net earnings were $27,338,000 for the first nine months of 2017, a
  4.4% increase from net earnings of $26,182,000 for the first nine
  months of 2016.
• Diluted earnings per share were $0.94 for the first nine months of
  2017, a 4.4% increase from diluted earnings per share of $0.90 for the
  first nine months of 2016.

Operations Review

“Our performance this quarter, which included record net sales for any
third quarter, further solidifies our optimism for the future,” said
Richard A. Meeusen, chairman, president and chief executive officer of
Badger Meter. “While the industry overall has experienced some
softening, our performance has remained steady, led by significant
growth in our E-Series® Ultrasonic meters and ORION®
Cellular technology, as well as ongoing acceptance of our BEACON®
Advanced Metering Analytics (AMA) managed solution. In addition, sales
of our Flow Instrumentation products continued to improve as we saw
significant increases across most of our product lines, including
valves, magnetic meters and meters for the oil and gas market.”

Net earnings for the quarter were impacted by higher brass costs, as
well as other costs. This resulted in a gross profit margin of 37.0% for
the third quarter of 2017 compared to 40.1% in the third quarter of 2016.

“Several major municipal water projects initially slated for the third
quarter are now expected in the future, as customers upgrade their
systems to take advantage of our new ORION Cellular LTE technology. We
believe that the strength of our newest products and the rebound in
industrial markets including oil and gas position us to end the year
strong and head into the new year with a favorable tailwind. Our
confidence is buttressed by our strong financial position and is
reflected in our 25th consecutive year of increases in the
quarterly cash dividend,” said Meeusen.

In September, the company announced the appointment of Kenneth Bockhorst
to the newly created position of senior vice president and chief
operating officer. Bockhorst officially joined Badger Meter on October
11, 2017, from Actuant Corporation (NYSE: ATU), where he previously
served as executive vice president of the company’s energy segment. He
brings a wealth of knowledge in global manufacturing and continuous
improvement to this new role at Badger Meter, as well as extensive
experience in delivering high-quality products and services in a
competitive global environment.

Conference Call and Webcast

Badger Meter management will hold a conference call to discuss the
company’s third quarter 2017 results on Tuesday, October 17, 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 76808965.
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
Tuesday, October 24, 2017, by dialing 1-855-859-2056 and entering the
passcode 76808965. 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, 2016 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 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, online at: http://www.badgermeter.com.

Contacts

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