Badger Meter is considering the possibility of expanding its production capacity as the Brown Deer-based company has seen sustained demand for its water meters.
The company saw its overall sales increase 12% to $137.8 million in the second quarter, including a 14% increase for it water utility sales. Badger Meter saw its order backlog grow during the quarter as new orders and supply disruptions more than offset improvements in production output.
Executives said supply chain issues have been the biggest hinderance on output, not internal production issues. Still, they described orders and backlog as “supportive of durable multi-year growth.”
“With our sustained success, with our strong demand environment and with our elevated backlog, largely caused by supply chain shortages. We are thinking a bit more about capacity expansion, more so than we have in the past,” said Bob Wrocklage, chief financial officer at Badger Meter.
As for where, how and when the company may look to invest in expanded production capacity, executives shared few details.
“There are no finite plans. There is no specific facility targeted. There is no dollar amount that I can quantify for you. Just signaling that, that is a potential forthcoming use of cash,” Wrocklage told analysts on the company’s earnings call.
The company has a 324,200-square-foot manufacturing and office facility in Brown Deer, a 134,300-square-foot operation in Mount Pleasant and a 181,300-square-foot facility in Nogales, Mexico.
"It isn't that we haven't invested in any capacity for several years and all of a sudden we find ourselves jammed up. We have continued to increase capacity on specific product lines over the past several years,” said Ken Bockhorst, chairman, president and chief executive officer of Badger Meter.
He noted the company is often asked about when it will be able to start reducing its backlog, traditionally it had not even discussed having one, but added it is good news the company is growing sales in the mid-teens while still growing its backlog.
“It’s a signal that clearly we’re optimistic about the future and looking more closely at our production capacity,” Bockhorst said of the comments.