Badger Meter’s new chief executive officer Ken Bockhorst is stepping into what many executives would see as an enviable position as he takes over from Rich Meeusen as the head of the Brown Deer-based manufacturer of water meters and other flow instrumentation equipment.
Sure, Meeusen was a high-profile executive in the Milwaukee area known for sprinkling comic relief into public remarks, but he also left the company in a strong position. Revenues increased nearly 8 percent in 2018 and adjusted earnings increased nearly 30 percent.
Badger Meter’s short-term debt also dropped from $44.6 million at the end of 2017 to $18.1 million at the end of last year. As Bockhorst put it, the company is “virtually out of debt.”
The company has historically allocated 25 percent of its capital to debt reduction and 15 percent to acquisitions. Another 35 percent has gone to internal investments and 25 percent to dividends.
Now that Badger Meter does not need to have the same focus on paying down debt, the company plans to allocate around 40 percent of its capital to acquisitions.
Badger Meter and its four main competitors already make up 90 percent of the North American market and analysts asked Bockhorst on Tuesday if the company would be exploring adjacent industries to the ones Badger Meter is currently in.
“It would be very reasonable to think of us as a company that’s going to do a lot more than just metering in the future,” he said.
Bockhorst said the company would take a disciplined approach to merger and acquisition activity, noting it has been evaluating which technologies could be sold to its current customers and help with global expansion.
“We’ve got a pretty good internal map,” he said, highlighting water quality and pipeline monitoring as technologies the company is considering.
Bockhorst added there likely would not be deals that are too small for the company to consider, especially if a company had the right technology. Deals could be too big, however, he added.
“We’re not going to go out and buy huge companies,” he said, describing $35 million to $65 million in revenue as a sweet spot.
