Badger Meter, Inc. · NYSE:BMI
Badger Meter — Investor Presentation (October 2022)
23 slides from Badger Meter's investor presentation, October 2022
Slide 1: Badger Meter General Investor Presentation
BADGER METER, INC. GENERAL INVESTOR PRESENTATION October 2022 © 2022 Badger Meter, Inc. 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements contained in this presentation 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
Slide 3: Badger Meter Is a Premier Smart Water Solutions Provider
BADGER METER IS A PREMIER SMART WATER SOLUTIONS PROVIDER • Comprehensive suite of digital smart water offerings including flow measurement, water quality and other parameters with software / analytics solutions $ • Industry leader in North American smart water metering, with a strong global position
Slide 4: Comprehensive Portfolio of Smart Water Offerings to Solve Customer Challenges
COMPREHENSIVE PORTFOLIO OF SMART WATER OFFERINGS TO SOLVE CUSTOMER CHALLENGES Secular Drivers Our Product and Digital Solutions Outcomes Data Communications • Flow (total and rate) • Wired / wireless networks Revenue and Population Growth Workforce Churn / • Water quality • Cellular communications C
Slide 5: Third Quarter Financial Snapshot
THIRD QUARTER FINANCIAL SNAPSHOT (US$ in millions, except per share data) • Utility water sales increased 17%, growth Q3 2022 Q3 2021 Change most notable in ultrasonic meters, ORION® Sales $148.0 $128.7 15.0% cellular endpoints and BEACON ® SaaS • Flow instrumentation sales up 5% with FX Gross Margi
Slide 6: Outlook / Macro-Trends
OUTLOOK / MACRO-TRENDS Well Positioned to Capitalize on Secular Tailwinds Driving Smart Water Solution Adoption; Growing Addressable Market • Innovation leader • “Choice matters” portfolio • Demonstrated benefits of efficiency, resiliency and sustainability Demonstrated Execution and Operational Rig
Slide 7: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES • No outstanding debt obligations and $115M of cash at September Internal Investment to support organic 30, 2022 growth and sustain core business • Strong free cash flow, working capital management Grow the dividend annually in line with • $150M untapped revolver – rece
Slide 8: Environmental, Social and Governance Integral to Business Strategy
ENVIRONMENTAL, SOCIAL AND GOVERNANCE INTEGRAL TO BUSINESS STRATEGY • Top ESG ratings – recognition of our ESG journey • Smart water solutions enable water conservation, resiliency and improved water quality – aligned with United Nations SDGs • Governance − Values/Culture − ESG risk and opportunity o
Slide 9: Building on Core Solutions with Water Quality Monitoring
BUILDING ON OUR ESTABLISHED FOUNDATION OF CORE SOLUTIONS WITH WATER QUALITY MONITORING • Complementary offerings Macro Trends Driving Water Quality Applications • Product technology - electrochemical and optical sensors Distribution system security / • Geographies - ATi in the US and UK, s::can inst
Slide 10: Smart Water Innovation Leader
SMART WATER INNOVATION LEADER Driving Enhancements in Smarter Measurement & Actionable Data ➔ Enhanced Operational Efficiencies Ultrasonic Metering Water Quality Cellular & IoT Software & Analytics • Smarter meters – flow, • Low maintenance, • 5th generation endpoint • Cloud software for utility pre
Slide 11: Background Information
BACKGROUND INFORMATION © 2022 Badger Meter, Inc. 11
Slide 12: More Than a Century of Smart Water Innovation
MORE THAN A CENTURY OF SMART WATER INNOVATION •Acquired Racine Federated, broadening industrial flow measurement applications •2013 Acquired AquaCue to advance smart water offerings - cellular radio and BEACON •Listed on the American software expertise Stock Exchange. Two Milwaukee entrepreneurs •La
Slide 13: Global Innovation and Manufacturing Footprint
GLOBAL INNOVATION AND MANUFACTURING FOOTPRINT Ultrasonics: Cellular / IoT: Lulea, Sweden Milwaukee, WI, USA Milwaukee, WI, USA Software: ❖ Lulea, Sweden – Ultrasonic technology development Milwaukee, WI – Communication technologies, Los Gatos, CA, USA advanced metering development Manchester UK Brno
Slide 14: Competitive Advantages – Why Badger Meter Wins
COMPETITIVE ADVANTAGES – WHY BADGER METER WINS >50K Water Utilities in US Broadest Range of Offerings • Brass and polymer – Choice Matters • Mechanical and static (ultrasonic) Utility Size and their Share of • Drive by, fixed and cellular radio technology Meter connections Technology Leadership • We
Slide 15: Cellular Communication vs. Fixed Network
CELLULAR COMMUNICATION VS. FIXED NETWORK • Easy • Flexible • Resilient • Savings • Standard LTE-M Cellular Communication Technology – Example of Innovation Leadership © 2022 Badger Meter, Inc. 15
Slide 16: Smart Water Acceleration
SMART WATER ACCELERATION The Business Case The Solutions Why are utilities willing to pay more? How our leading technologies deliver • Reduce non-revenue water (NRW) • Meters • Mechanical meters lose some accuracy over • Static (E-series ultrasonic) holds accuracy over time lifetime; commercial size
Slide 17: Utility Water-Integrated Solution Offering
UTILITY WATER-INTEGRATED SOLUTION OFFERING Mechanical Meters 1 Static Meters 1 • Broadest product offering - both mechanical 1 and static meters in both metal and polymer • Next generation E-Series Ultrasonic Meter METERS with D-Flow technology Recordall® Disc E-Series® Ultrasonic • Complete line of
Slide 18: Smart Water Key Growth Strategies
SMART WATER KEY GROWTH STRATEGIES • Maintain leading position in the North American smart water market through continued development of leading-edge offerings • Penetrate and grow select international markets (e.g. Middle East, UK) with fit-for- market solutions • Leverage addition of real-time wate
Slide 19: Radio Connectivity - Penetration
RADIO CONNECTIVITY - PENETRATION MANUAL READ METERS WITH RADIOS/SOFTWARE $40-$50 price $150-$250 price per per meter system CONVERSION TO CONTINUE • Badger Meter was the first US company to offer radios on water meters (1988) • Radio connectivity allows for automated North American water meter marke
Slide 20: Flow Instrumentation Key Growth Strategies
FLOW INSTRUMENTATION KEY GROWTH STRATEGIES • Expand niche share by targeting water-related applications, predominately • Building Automation/HVAC/Sustainability • Water and Wastewater treatment and distribution • Leverage addition of real-time water quality monitoring for industrial process and disc
Slide 21: Strategic Acquisitions
STRATEGIC ACQUISITIONS Year Company Type Location Price Utility Water Instrumentation and Connectivity: • Technology solutions that can be 2021 Analytical Technology, Inc Water quality monitoring USA / UK $44M leveraged across both utility and flow instrumentation markets 2020 s::can Water quality m
Slide 22: Annual Financial Trends
ANNUAL FINANCIAL TRENDS (US$ in millions, except per share data) • Sales growth driven primarily by smart water solution penetration 2018 2019 2020 2021 • Radios and SaaS Sales $433.7 $424.6 $425.5 $505.2 • Water quality Adj Oper Earnings 59.4 62.2 65.2 78.7 13.7% 14.6% 15.3% 15.6% • Margins driven
Slide 23: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS EBITDA Free Cash Flow (US$ in millions) (US$ in millions) Q3 2022 Q3 2021 YTD 2022 YTD 2021 Q3 2022 Q3 2021 Net Earnings (GAAP) $17.9 $15.9 $49.0 $43.6 Cash from Ops (GAAP) $23.8 $15.4 Interest (income) expense (0.1) 0.0 (0.1) 0.0 Capital Expenditures (1.9) (1.5) Inc