Milwaukee-based Badger Meter Inc. has acquired Los Gatos, Calif.-based software technology company Aquacue Inc. for $14 million.
The addition will help advance Badger Meter’s water usage management technology.
“Although this is an early-stage company without significant sales, we believe Aquacue’s intellectual property can move us further down the road in adding new technology enhancements to our Advanced Metering Analytics automatic meter reading system,” said Richard Meeusen, chairman, president and chief executive officer of Badger Meter.
Badger Meter expects to introduce new products using Aquacue technologies in the early part of next year, he said. While the acquisition won’t be immediately accretive, it will help the company long term, he said.
“As we integrate the new products that use Aquacue technology, we should be able to gain marketshare for our business, and that’s where we’ll see accretion from the acquisition,” Meeusen said.
The acquisition was announced in Badger Meter’s first quarter earnings release. The report showed a weak first quarter performance.
Badger Meter’s net earnings were $2.9 million in the first quarter, down 53.5 percent from $6.2 million in the first quarter of 2012.
Diluted earnings per share were 20 cents, down 52.4 percent from 42 cents in the first quarter of 2012.
Meeusen attributed the decline to weather, municipal budget constraints and Hurricane Sandy.
“The utility business is seasonal, with fewer meter installations typically completed during the winter months. Our experience has been that more snow cover correlates to lower sales. According to the Rutgers Global Snow Lab, the 48 contiguous U.S. states had 47 percent more snow cover this year than in last year’s first quarter. In addition to the snow cover, other factors contributing to our lower first quarter sales include a 30 percent decrease in sales to utilities in communities in the Northeast affected by Hurricane Sandy and lingering concerns related to municipal budgets. We believe these factors are temporary events that have delayed some meter orders into future quarters and our market share has not changed.”
The snow cover in the first quarter was similar to that seen in the first quarter of 2011, said Richard Johnson, senior vice president of finance and chief financial officer.
“Often these weather events cause delays in meter orders, with a weaker first quarter followed by a stronger second quarter as seen in 2011,” Johnson said. “We don’t believe that this is anything more than our normal lumpiness.”
Badger Meter also announced an exclusive agreement it recently signed with Ocala, Fla.-based Elster AMCO Water LLC. Elster previously announced its decision to exit the mechanical water meter business in North America as of June 30.
In the aftermath of the announcement, Badger Meter formed an agreement with Elster to become the recommended supplier for its mechanical customers. Badger will have the advantage of an Elster representative on its sales calls as it works to gain those customers in a scramble with competitors for marketshare.
“We view this as a significant opportunity for Badger Meter,” Meeusen said. “We believe that this agreement will have a positive impact on the second half of this year.”
