Municipal cutbacks clip sales for Badger Meter

Milwaukee-based Badger Meter Inc. reported third quarter net earnings of $6.9 million, or 46 cents per share, down from record net earnings of $9.0 million, or 60 cents per share, in the same period a year ago.
The company’s quarterly sales dipped 7.9 percent to $69.7 million from $75.7 million a year earlier.
"Our third quarter sales were impacted by a continued slowdown in spending and new projects by a number of customers in the municipal water market. This trend began early in 2011 with a lengthening of the decision-making process in light of uncertainties about the economic environment and potential spending reductions. We’ve managed through lulls in the municipal water market in the past and we are optimistic that our products along with new innovations give us a competitive advantage and position us well in the coming year," said Richard Meeusen, chairman, president and chief executive officer of Badger Meter.
Meeusen said the lower sales to the municipal water market were slightly offset by higher sales of specialty products.
"We saw double-digit increases in sales of electromagnetic and industrial flowmeters, as well as Research Control valves in the third quarter. Third quarter sales also included sales of Remag AG, which was acquired in January 2011. Sales of Badger ORION radio transmitters for natural gas meters were down from the prior year as the Duke Energy contract begins to taper off," he said. "We are well positioned in the municipal water market and we believe the increases in sales of our specialty products are an indicator that the underlying economy is improving. We continue to invest in new product development and remain focused on controlling costs. Cash generated from operations nearly doubled for the first nine months of 2011 compared to 2010. We have a strong balance sheet, our debt-to-cash position is now positive and we increased our quarterly common stock dividend by 14.3 percent to 16 cents per share in August.”
Looking ahead, Meussen said, “The fundamentals of our business remain strong. The global focus on water conservation and the fact that less than 30 percent of U.S. water meters are equipped with meter reading technology provide opportunities for both organic growth and growth through acquisitions. We are also encouraged by the decline in copper prices during the third quarter. While still volatile, continued copper pricing at the current level could have a positive impact on our results for 2012.”

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